“…Thus far, empirical analyses of the tax–wage relation assess either corporate tax incidence on wages (Randolph, ; Desai et al., ; Felix and Hines, ; Dwenger et al., ; Arulampalam et al., ; Fuest et al., ; Clausing, ) or fiscal compensation for higher wage costs (Mittermaier and Rincke, ), and ignore the potential bidirectional nature of this relation. The first contribution of this paper therefore lies in simultaneously testing for both a tax incidence and a fiscal compensation effect in a data set comprising 24 OECD countries over the period 1982–2007.…”