Key Highlights
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A new global minimum tax on large companies, introduced in 2024, is expected to significantly reduce the practice of shifting profits to low-tax countries. This means multinational corporations will likely pay higher effective tax rates worldwide, leading to fairer competition and more tax revenue for governments.
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A study in Slovakia found that the global minimum tax could increase the country’s corporate tax revenue by 4%, with half of that increase coming directly from the new tax and the other half from profits that companies will no longer be able to move out of the country. This shows how the policy can directly benefit national economies by keeping taxable profits at home.
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Financial incentives that encourage unemployed workers to search for jobs in distant cities successfully get them to apply for and accept work farther away. However, this focus on distant opportunities also leads them to search less for local jobs, which can ultimately hurt their chances of getting rehired and lower their earnings.
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The main reason these mobility incentives can backfire is due to “spatial search frictions,” meaning the practical difficulties and costs of finding and securing a job far from home. This finding is crucial for policymakers to design better job support programs that don’t accidentally reduce a person’s local job prospects.
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In Ghana, despite a period of economic growth, the average size of manufacturing firms did not increase, which is unusual compared to development patterns in other parts of the world. This suggests the country’s economic growth hasn’t led to the typical “structural change” where businesses grow larger and more productive.
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Earlier data showing a dramatic collapse in Ghana’s average firm size was misleading because the census numbers weren’t comparable over time; when adjusted properly, the decline was more modest. This highlights the importance of consistent data for accurately tracking a country’s economic development and business landscape.
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