Dinerstein, MarcosPatiño Peña, Fausto2023-04-112023-04-112023-04-11https://openknowledge.worldbank.org/handle/10986/39660This paper quantifies the impact of effective corporate tax rates on aggregate total factor productivity. Using Chilean manufacturing data, the paper documents a large dispersion in the effective tax rate faced by firms and a mass of firms facing a 0 percent tax rate. These empirical patterns are incorporated into a standard monopolistic competition model with corporate tax rates. The paper’s quantitative findings show that the TFP gains between the economy implied by the Chilean tax code of 1998–2007 and a hypothetical economy without effective corporate tax rate inefficiencies are between 4 and 11 percent. The paper considers counterfactual policies in which all firms face the same tax rate and finds a monotonically decreasing relationship between the level of the tax rate and total factor productivity.enCC BY 3.0 IGOCORPORATE TAX RATECORPORATE TAX IMPACT ON PRODUCTIVITYMONOPOLISTIC COMPETITIONPRODUCTIVITYTAX CODEMANUFACTURING SECTOR TAX DATAWorking PaperWorld Bank10.1596/1813-9450-10394