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Is the Impact of Labour Taxes on Unemployment asymmetric?

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  • T. BERGER

    ()

  • G. EVERAERT

    ()

Abstract

This paper tests whether the impact of labour taxes on unemployment is symmetric with respect to increases and decreases in labour taxes. Using a panel of 16 OECD countries over the period 1970-2005, we estimate a panel unobserved component model to account for the fact that unemployment rates and labour taxes are non-stationary but not co integrated. We find a positive impact of tax increases in European and Nordic countries but no effect of decreasing labour taxes on the rate of unemployment. For Anglo-Saxon countries, no impact of labour taxes on unemployment is found.

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File URL: http://www.feb.ugent.be/nl/Ondz/wp/Papers/wp_08_523.pdf
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Bibliographic Info

Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 08/523.

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Length: 9 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:rug:rugwps:08/523

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Keywords: unemployment; labour taxes; asymmetry; unobserved component model;

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