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Evaluating regional cuts in the payroll tax from a firm perspective

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  • Jonas Månsson
  • A. Quoreshi

Abstract

With few exceptions, reduced payroll taxes are analysed with regard to employment and wage effects. Our study extends the impacts to cover several possible firm outcomes using a multilevel modelling approach. Between 20 and 55 % in the variation, the outcomes can be explained by municipality differences. On firm level, the result follows a clear business logic. In the short run, profits and turnover increased which later on transforms into increased wages. After 7 years, we find the indication of impacts on investments. Thus, the support has some short-term impacts that are reduced with time and the long-term effects are questionable. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Jonas Månsson & A. Quoreshi, 2015. "Evaluating regional cuts in the payroll tax from a firm perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 323-347, March.
    • Handle: RePEc:spr:anresc:v:54:y:2015:i:2:p:323-347
    DOI: 10.1007/s00168-015-0656-2
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    Cited by:

    1. Emmanuel Saez & Benjamin Schoefer & David Seim, 2019. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," American Economic Review, American Economic Association, vol. 109(5), pages 1717-1763, May.
    2. Mattsson, Pontus, 2019. "The impact of labour subsidies on total factor productivity and profit per employee," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 325-341.
    3. Manelici, Isabela & Pantea, Smaranda, 2021. "Industrial policy at work: Evidence from Romania’s income tax break for workers in IT," European Economic Review, Elsevier, vol. 133(C).

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    Keywords

    R28;

    JEL classification:

    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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