increase in the corporate tax rate is estimated to decrease the wage of low-education labor by
0.91 percent, middle-education labor by 0.27 percent and high-education labor by 0.22 percent.
The inconclusive nature of the results in Table 7 suggests that we should look at similar
results using the average corporate tax rate. These results are shown in Table 8. The coefficients
on the average corporate tax rate are strikingly consistent across skill-level with a one percentage
point increase in the average corporate tax rate predicted to decrease wages by 0.85 - 1.05
percent. Thus, the results do not provide support for the theory that the burden of the corporate
tax falls more heavily on highly-skilled labor.
Next, I use individual data available within a country/year dataset to regress individual
wage rates on education, age, age-squared and male. I run individual regressions for each
country/year dataset that provides wage rates. For each country/year I use two measures of
education: one including dummies for middle education and high education and another
including an overall education variable valued at one for low, two for middle and three for high
education. Table 9 reports the coefficients on middle and high education taken from one
regression and the coefficient on overall education taken from the other for each country/year
observation. These coefficients represent the return to education in a given country. The
marginal and average corporate tax rates are listed in order to compare the tax rate with the
return to education. Figure 4 plots the return to high education (above low) with the marginal
corporate tax rate. This figure shows some evidence that the return to education is negatively
impacted by the marginal corporate tax rate. Figure 5 plots the return to high education (above
low) with the average corporate tax rate. This figure does not show any evidence of decreasing
returns to education in response to corporate tax rates. Using the data in Table 9, I regress the
return to education (middle, high, overall) on the average corporate tax rate, openness and their
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