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Social Security Contributions and the Business Cycle

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  • Almosova, Anna
  • Voigts, Simon
  • Burda, Michael

Abstract

This paper examines magnitudes and business cycle dynamics of social security contributions (SSC). In most OECD countries studied, we document a negative covariation of payroll tax burdens with GDP and GDP growth at business cycle frequencies and lower. Changes in average payroll tax burdens are mostly accounted for by tax schedule changes, and not to changes in the earnings distribution over time. SSC rates behave similarly to estimated values of the “labor wedge” (Chari et al. 2007, 2016).

Suggested Citation

  • Almosova, Anna & Voigts, Simon & Burda, Michael, 2017. "Social Security Contributions and the Business Cycle," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168134, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168134
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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