Labour Taxation and Greenfield FDI Decisions - The Case of OECD Countries

Sammanfattning: This thesis investigates the impact of labour taxation on greenfield FDI decisions in OECD countries between the years 2003 and 2013, using panel data and both fixed effects and first differences models. The findings suggest that labour taxation has a statistically significant negative impact on the discrete decision whether to invest or not. However, no statistically significant impact on the continuous decision of how much to invest was found. This means that the main findings are partly in line with findings from previous studies on the subject, since those have found that labour taxation has a negative impact on both types of decisions. Further areas of research could include investigating the impact of changes in tax rates on FDI within one country. Also, controlling for additional types of taxes would be interesting, or to look at the role of labour tax rates in industry specific data to see whether the impacts are different in different industries.