How Low Business Tax Rates Attract Multinational Headquarters: Municipality-Level Evidence from Germany



Table 3: Cross section 2005

Indep. variables

Negative Binomial

Zero-Inflated

Negative Binomial

MNE

NEWMNE

MNE

NEWMNE

TAX

-2.514***

-2.594***

-1.571***

-4.578*

(0.332)

(0.894)

(0.448)

(2.482)

SKILL

0.612***

1.296***

0.775***

1.016***

(0.069)

(0.179)

(0.084)

(0.351)

POPDEN

1.115***

0.873***

0.621***

0.982

(0.099)

(0.279)

(0.122)

(0.717)

AREA

1.198***

1.024***

0.797***

0.899***

(0.032)

(0.079)

(0.051)

(0.256)

IDEPRAT

1.727**

3.936

2.044

7.273*

(0.873)

(2.73)

(1.254)

(3.759)

BUILT

0.762***

0.932*

0.732***

0.324

(0.167)

(0.480)

(0.189)

(0.819)

INV

-0.002

0.02

-0.09

0.051

(0.042)

(0.133)

(0.055)

(0.301)

EAST

-0.789***

-1.033***

-1.178***

-1.856***

(0.124)

(0.327)

(0.132)

(0.521)

constant

-12.24***

-10.65***

-5.77***

-12.84

(1.061)

(2.723)

(1.37)

(8.04)

α

1.12

1.852

0.648

1.10

(0.079)

(0.391)

(0.087)

(0.193)

Wald test (χ2)

4909.2

1001.6

1328.43

125.7

p-value

0.000

0.000

0.000

0.000

Pseudo log-likelihood

-5676.71

-932.82

-5571.01

-916.93

Observations

11208

11208

11208

11208

Nonzero obs.

1631

229

1631

229

Marginal effect
of
TAX

-0.17***

-0.008***

-0.22***

-0.05*

(0.02)

(0.003)

(0.06)

(0.02)

Notes: 1. Robust standard errors reported in parentheses.

2. All explanatory variables are in logs and lagged once (i.e. the values are for 2004).

3. The inflation model of the Zero-Inflated Negative Binomial model is a logit, the regres-
sors are the same as in the main specification. Results available upon request.

4. Marginal effect evaluated at the sample mean. Standard errors in parentheses, for
the derivation see appendix. *, **, and *** indicate significance at 10%, 5%, and 1%,
respectively.

28



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