Cheaper and more haircuts after VAT cut? Evidence from the Netherlands

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We study the effect of the reduction in the VAT rate on hairdresser services from 17.5 to 6% in the Netherlands in January 2000. Following Kosonen (J Public Econ 131:87-100, 2015), we use differences-in-differences to estimate the effects of this reform, with beauty salons as the main control group. In our preferred specification, we find close to full pass-through of the VAT cut into lower prices. However, we find no statistically or economically significant effect on the volume of sales or employment.

Original languageEnglish
Pages (from-to)135-154
JournalDe Economist
Volume166
Issue number2
DOIs
Publication statusPublished - Jun 2018

Keywords

  • VAT reform
  • Hairdressers
  • Differences-in-differences
  • Netherlands
  • TAXATION

Cite this

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title = "Cheaper and more haircuts after VAT cut?: Evidence from the Netherlands",
abstract = "We study the effect of the reduction in the VAT rate on hairdresser services from 17.5 to 6{\%} in the Netherlands in January 2000. Following Kosonen (J Public Econ 131:87-100, 2015), we use differences-in-differences to estimate the effects of this reform, with beauty salons as the main control group. In our preferred specification, we find close to full pass-through of the VAT cut into lower prices. However, we find no statistically or economically significant effect on the volume of sales or employment.",
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author = "Egbert Jongen and Arjan Lejour and Gabriella Massenz",
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Cheaper and more haircuts after VAT cut? Evidence from the Netherlands. / Jongen, Egbert; Lejour, Arjan; Massenz, Gabriella.

In: De Economist, Vol. 166, No. 2, 06.2018, p. 135-154.

Research output: Contribution to journalArticleScientificpeer-review

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