Corporate Tax Incidence, Wage Determination, and Labour Market Outcomes in Nigeria: Evidence from Firm-Level Panel Data

This doctoral research empirically investigates the incidence of the corporate income tax on wages and labour market outcomes in Nigeria, addressing a gap in the incidence literature that has predominantly focused on advanced economy contexts where capital is highly mobile. The standard model of corporate tax incidence in open economies, associated with Harberger and extended by Gravelle and others, predicts that in the long run, corporate taxes are borne by labour through reduced wages when capital can relocate across borders. The validity of this prediction for Nigeria, where capital mobility is constrained by exchange controls, infrastructure deficits, and investment uncertainty, requires original empirical scrutiny. Using a matched employer-employee panel dataset constructed from FIRS large taxpayer records, National Bureau of Statistics establishment surveys, and the Nigeria Living Standards Survey, the study estimates the wage-corporate tax elasticity using a regression discontinuity design that exploits the statutory CIT rate differential between small and medium enterprises introduced by the Finance Act 2019. The study expects to find a significantly smaller labour incidence of the corporate tax in Nigeria relative to advanced economy estimates, consistent with lower capital mobility reducing the capacity of capital to escape the tax burden through wage reduction. Robustness analysis tests heterogeneous incidence across formal and informal labour market segments. Original contributions include constructing the matched employer-employee panel dataset and the first regression discontinuity design in the Nigerian corporate tax incidence literature. Keywords: corporate tax incidence, wage determination, labour market, regression discontinuity, Nigeria.