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TAX HAVENS AND THEIR IMPACT ON UNEMPLOYMENT

  • Unique Paper ID: 166283
  • Volume: 11
  • Issue: 2
  • PageNo: 1170-1227
  • Abstract:
  • The research investigates and evaluates the role of tax haven economies in generating unemployment in an economy. The study adopts a 30-year sample size of four economies from 1986 to 2016. The economies employed in the study are; Singapore and Switzerland which are tax haven economies, and UK and US which are non-tax haven economies. RGDP, FDI, Total Investments and Total Revenue are used as macroeconomic indicators to distinguish a tax haven and not- tax haven economies. The ARDL Bounds Testing and ARDL Long-run Form has been utilised to empirically test this argument, whether a significant relationship exists and whether a short or long–run interaction is present between these economic indicators. The outcome from the empirical estimations suggests a short and long-run relationship between all the variables employed, thus with the Singapore and Switzerland results being valid and statistically significant, contrary to the outcome obtained on UK and US economies which show insignificant results despite showing both short and long-run relationship amongst the variables. The analyses done on the Singapore and Switzerland data show a negative relationship existing between unemployment, RGDP and total investments, a negative relationship between unemployment and FDI for the Singapore economy while showing a positive correlation between FDI and unemployment in Switzerland. For Singapore, the results indicate a positive relationship between unemployment and total revenue, while showing a negative correlation in Switzerland. These suggest a rise in the level of RGDP, and total investment will yield a decline in unemployment rate in the Singapore and Switzerland economies; an increase in FDI will reduce unemployment in Singapore while increasing unemployment in Switzerland. Furthermore, an increase in total revenue increases unemployment in Singapore and reduces unemployment in Switzerland. Nevertheless, the results on UK and US are statistically insignificant and invalid, thus leading to the conclusion that the empirical pieces of evidence obtained are inconclusive, and that the model adopted for both economies are incompatible.
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Cite This Article

  • ISSN: 2349-6002
  • Volume: 11
  • Issue: 2
  • PageNo: 1170-1227

TAX HAVENS AND THEIR IMPACT ON UNEMPLOYMENT

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UGC Approved
Journal no 47859

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