Corporation income taxation impact on unemployment rate: VAR model approach

  • Received February 10, 2023;
    Accepted June 27, 2023;
    Published June 30, 2023
  • Author(s)
    Nguyen Ngoc Son
    ORCID
  • DOI
    http://dx.doi.org/10.21511/ppm.21(2).2023.66
  • Article Info
    Volume 21 2023, Issue #2, pp. 744-757
  • TO CITE АНОТАЦІЯ
  • Cited by
    1 articles
  • 565 Views
  • 327 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

Corporate income tax is an important tax for the state to regulate budget revenue and is an important tool for encouraging and promoting production and business development to create jobs. This study investigated the relationship and impact between corporate income tax and unemployment in Vietnam, China, and South Africa to investigate whether higher corporate income tax contributes to higher unemployment. Data on corporate taxation and unemployment rates from 2000 to 2020 are collected, and the VAR model, cointegration, and impulse response tests were applied to estimate the impact of taxation on the unemployment rates of developed, developing, and underdeveloped countries. The corporate tax and unemployment rates have a close relationship: South Africa, China, and Vietnam correspond to 82%, 54.3%, and 47%, and the majority of the model’s variables for the three countries are non-stationary at lag I(0), with the exception of the variable for China’s unemployment rate, which demonstrates that the probabilities of the model’s variables for Vietnam and South Africa are greater than the alpha of 0.05 and are, respectively, 0.6193, 0.7299, 0.3421, and 0.6347. Thus, variables have a lag after year, in this case, assuming that other factors remain unchanged if the corporate tax rate decreases by 1%, South Africa’s unemployment rate decreases by 10%. Similarly, Vietnam’s unemployment rate decreased by 1.1%, but China’s unemployment increased by 2.9%. The suggestion is that the government adjusts tax laws to better match micromanagement and regulate and balance the relationship between taxes and unemployment.

view full abstract hide full abstract
    • Figure 1. Countries’ impulse response of Tax to Unemp innovation
    • Figure 2. Countries’ inverse roots of AR characteristic polynomial
    • Table 1. Description of variables
    • Table 2. Countries’ covariance, correlation coefficient, and descriptive statistics
    • Table 3. Countries’ unit root test at lag I(0)
    • Table 4. Countries’ unit root test at lag I(1)
    • Table 5. Countries’ VAR lag order selection criteria of corporate tax and unemployment rates
    • Table 6. Countries’ unrestricted cointegration rank test (Trace) of corporate tax and unemployment rates
    • Table 7. Countries’ vector autoregression estimates of corporate tax and unemployment rates
    • Table 8. Tested causality of countries’ tax and unemployment variables
    • Conceptualization
      Nguyen Ngoc Son
    • Data curation
      Nguyen Ngoc Son
    • Formal Analysis
      Nguyen Ngoc Son
    • Investigation
      Nguyen Ngoc Son
    • Methodology
      Nguyen Ngoc Son
    • Resources
      Nguyen Ngoc Son
    • Validation
      Nguyen Ngoc Son
    • Visualization
      Nguyen Ngoc Son
    • Writing – original draft
      Nguyen Ngoc Son
    • Writing – review & editing
      Nguyen Ngoc Son
Related Articles

  • Industrial Revolutions and their impact on managerial practice: Learning from the past

    Lucia KohnováORCID , Nikola SalajováORCID doi: http://dx.doi.org/10.21511/ppm.17(2).2019.36
    Problems and Perspectives in Management Volume 17, 2019         Issue #2         pp. 462-478 Views: 4221 Downloads: 1790 TO CITE АНОТАЦІЯ

    Technological changes that come with industrial revolution have largely affected businesses, as well as society. With the current technological shift and Fourth Industrial Revolution, many questions arise regarding the impacts and effects on current ways businesses operate. This study presents a retrospective analysis and overview of previous industrial revolutions. The aim of the retrospective analysis is to identify common characteristics that may lead to lessons learned for the forthcoming Fourth Industrial Revolution and thus complement the current debate on technological change. All previous industrial revolutions have led to change in business environments and new challenges for managers and owners. The findings show that all previous revolutions have led to increase in the number of service jobs created. The key approach of successful countries during the times of industrial revolution has included education as the source of new skills and knowledge necessary for adaption. Countries that were able to produce high skilled people could not only invent, but also adapt to new technologies sooner than others. Similarly, these approaches included introduction of new managerial practices in order to be able to utilize new technologies and new skilled workers effectively. The research article processes secondary data together with literature review on this topic.

  • Environmental Performance Index: relation between social and economic welfare of the countries

    Tetyana PimonenkoORCID Researcher ID, Oleksii LyulyovORCID Researcher ID, Olena ChygrynORCID Researcher ID, Maksim Palienko doi: http://dx.doi.org/10.21511/ee.09(3).2018.01
    Environmental Economics Volume 9, 2018         Issue #3         pp. 1-11 Views: 3585 Downloads: 549 TO CITE АНОТАЦІЯ

    The paper deals with the analysis of methodology of Environmental Performance Index. The authors analyzed and systematized the main existing integrated indices, which were used for evaluation of environmental, social and economic situation in the countries. The authors allocated the environmental performance index as a basis for analyzing the environmental policy of the country. In this direction, the authors analysed the main features, structure and indicators of environmental performance index. The authors allocated the world-leader countries with huge level of CO2 emissions. According to the results, the authors aproved that these countries should improve their environmental policy. Accordingly, they occupied less position in environmental performance index. For the purpose to analyze the relation between ecological, social and economic welfare, the authors analyzed score of sustainable development goal index, social progress index and gross domestic product per capita. The comparison analysis of findings showed that countries with good position on environmental performance index have the strong position on sustainable development goal index and social progress index. The authors suggested that Ukraine should orient to the EU countries with purpose to improve the environmental policy.

  • Business dynamism in the world economy

    Zuzana VirglerovaORCID , Felice AddeoORCID , Eliska ZapletalikovaORCID doi: http://dx.doi.org/10.21511/ppm.18(3).2020.14
    Problems and Perspectives in Management Volume 18, 2020         Issue #3         pp. 160-169 Views: 2846 Downloads: 324 TO CITE АНОТАЦІЯ

    The creation and growth of new enterprises and, on the other hand, their decline and market exit are crucial factors of business dynamism and economic growth. Thus, business dynamism is an important aspect in the market chain and productivity of an economy, as well as a trigger for market reforms. The aim is to analyze business dynamism using Global Competitiveness Index 4.0 and its variables worldwide and to verify the relationship between business dynamism in the EU states and economic characteristics such as Valued added at factor cost, Enterprise Birth Rate and Enterprise Death Rate. Data were collected from the 2019 Global Competitiveness Report and from the EUROSTAT database, using the most recently updated source for each indicator. The 11th pillar of the Global Competitiveness Index, focused on business dynamics, and a set of indicators were analyzed using PCA to verify if all the variables are effective representatives of the concept. It was found out that the pillar does not effectively represent the concept of business dynamism in case of the EU countries; therefore the new pillar was constructed. A strong and statistically significant correlation between business dynamism and Value Added was confirmed. A relationship between business dynamism and other economic indicators was not proven. From a territorial point of view, Oceania achieved the best overall result in the analyzed field. The process of starting a new business is the most challenging in terms of start-up costs in South America. By contrast, the EU has reached the best result in this process.

Download Preview
Close
Problems and Perspectives in Management
Problems and Perspectives in Management