IDEAS home Printed from https://ideas.repec.org/a/beo/journl/v61y2016i208p73-92.html

Labour Market Effects Of Social Security Contribution Reform In Serbia

Author

Listed:
  • Jelena Žarković-Rakić
  • Saša Ranđelović
  • Marko Vladisavljević

Abstract

In Serbia the inactivity rate of the working-age population is close to 40%, among the highest in Europe. The country also faces a high informal employment rate of 24%. Previous research has argued that high levels of informality and inactivity are mostly due to a high effective tax wedge at low wage levels caused by a minimum base for calculation of social security contributions (SSC), sudden withdrawal of means-tested benefits once formal income is earned, and low progressivity of income tax. This paper evaluates the impact of the minimum SSC base reform scenarios on labour supply and employment formalization using tax and benefit micro-simulation models together with the structural discrete choice labour supply model based on the Survey on Income and Living Conditions Data. Although we do not find positive employment effects of the reform, it would be premature to deduce that abolishment of the minimum SSC base is not needed. At this stage in our research, until alternative labour-supply modelling is applied, with both sector and hours of work choice alternatives, it is only safe to conclude that the proposed reform will not significantly contribute to the transformation of informal full-time to formal full-time jobs.

Suggested Citation

  • Jelena Žarković-Rakić & Saša Ranđelović & Marko Vladisavljević, 2016. "Labour Market Effects Of Social Security Contribution Reform In Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 61(208), pages 73-92, January -.
    • Handle: RePEc:beo:journl:v:61:y:2016:i:208:p:73-92
    as

    Download full text from publisher

    File URL: http://www.ekof.bg.ac.rs/wp-content/uploads/2014/04/403-1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jaime Saavedra & Alberto Chong, 1999. "Structural reform, institutions and earnings: Evidence from the formal and informal sectors in urban Peru," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 95-116.
    2. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2012. "Comparing Labor Supply Elasticities in Europe and the US: New Results," SOEPpapers on Multidisciplinary Panel Data Research 525, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Gorana Krstić & Peter Sanfey, 2011. "Earnings inequality and the informal economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(1), pages 179-199, January.
    4. Bargain, Olivier B. & Orsini, Kristian & Peichl, Andreas, 2011. "Labor Supply Elasticities in Europe and the US," IZA Discussion Papers 5820, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nicholas-James Clavet & Luca Tiberti & Marko Vladisavljevic & Jelena Zarkovic Rakic & Aleksandra Anic & Gorana Krstic & Sasa Randelovic, 2017. "Reduction of child poverty in Serbia: Improved cash-transfers or higher work incentives for parents?," Working Papers PMMA 2017-04, PEP-PMMA.
    2. Ranđelović Saša & Žarković Rakić Jelena & Vladisavljević Marko & Vujić Sunčica, 2019. "Labour Supply and Inequality Effects of In-Work Benefits: Evidence from Serbia," Naše gospodarstvo/Our economy, Sciendo, vol. 65(3), pages 1-22, September.
    3. Andy McKay & Jukka Pirttilä & Caroline Schimanski, 2019. "The tax elasticity of formal work in African countries," WIDER Working Paper Series wp-2019-69, World Institute for Development Economic Research (UNU-WIDER).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Norbert Švarda & Matúš Senaj & Michal Horváth & Zuzana Siebertová, 2015. "The End of the Flat Tax Experiment in Slovakia," Discussion Papers 33, Central European Labour Studies Institute (CELSI).
    2. Chiara Daniela Pronzato, 2015. "Fighting Lone Mothers’ Poverty Through In-Work Benefits: Methodological Issues and Policy Suggestions," CESifo Economic Studies, CESifo Group, vol. 61(1), pages 95-122.
    3. George Economides & Thomas Moutos, 2016. "Can Minimum Wages Raise Workers’ Incomes in the Long Run?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(6), pages 961-978, December.
    4. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Reforming Family Taxation in Germany - Labor Supply vs. Insurance Effects," CESifo Working Paper Series 4386, CESifo.
    5. H. Xavier Jara & Alberto Tumino, 2013. "Tax-benefit systems, income distribution and work incentives in the European Union," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 27-62.
    6. Mennuni, Alessandro, 2013. "Labor Force Composition and Aggregate Fluctuations," Discussion Paper Series In Economics And Econometrics 1302, Economics Division, School of Social Sciences, University of Southampton.
    7. Zuzana Siebertova & Matus Senaj & Norbert Svarda & Jana Valachyova, 2015. "To Work or Not to Work? Updated Estimates of Labour Supply Elasticities," Working Papers Working Paper No. 3/2015, Council for Budget Responsibility.
    8. Thomas K. Bauer & Tanja Kasten & Lars-H. R. Siemers, 2017. "Business Taxation and Wages: Redistribution and Asymmetric Effects," MAGKS Papers on Economics 201732, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    9. Figari, Francesco & Paulus, Alari, 2013. "The distributional effects of taxes and transfers under alternative income concepts: the importance of three ‘I’s," EUROMOD Working Papers EM15/13, EUROMOD at the Institute for Social and Economic Research.
    10. Shun-ichiro Bessho & Masayoshi Hayashi, 2015. "Should the Japanese tax system be more progressive? An evaluation using the simulated SMCFs based on the discrete choice model of labor supply," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(1), pages 144-175, February.
    11. Kamil Galuscak & Gabor Katay, 2014. "Labour Force Participation and Tax-Benefit Systems: A Cross-Country Comparative Perspective," Working Papers 2014/10, Czech National Bank, Research and Statistics Department.
    12. Brown, Alessio J.G. & Merkl, Christian & Snower, Dennis J., 2014. "The minimum wage from a two-sided perspective," Economics Letters, Elsevier, vol. 124(3), pages 389-391.
    13. Doerrenberg, Philipp & Duncan, Denvil, 2014. "Experimental evidence on the relationship between tax evasion opportunities and labor supply," European Economic Review, Elsevier, vol. 68(C), pages 48-70.
    14. Kunze, Lars & Suppa, Nicolai, 2013. "Job Characteristics and Labour Supply," Ruhr Economic Papers 418, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    15. Leon Bettendorf & Kees Folmer & Egbert Jongen, 2013. "The dog that did not bark: The EITC for single mothers in the Netherlands," CPB Discussion Paper 229, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Lars Kunze & Nicolai Suppa, 2013. "Job Characteristics and Labour Supply," Ruhr Economic Papers 0418, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    17. Alena Bičáková, 2014. "The trade-off between unemployment and wage inequality revisited," Oxford Economic Papers, Oxford University Press, vol. 66(4), pages 891-915.
    18. Olivier Bargain & André Decoster & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2013. "Welfare, labor supply and heterogeneous preferences: evidence for Europe and the US," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 789-817, October.
    19. Daniela Andrén & Thomas Andrén, 2016. "Women’s and men’s responses to in-work benefits: the influence of children," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-24, December.
    20. Chiara Daniela Pronzato, 2014. "Fighting Lone Mothers’ Poverty through In-Work Benefits. Methodological Issues and Policy Suggestions," CHILD Working Papers Series 23, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:beo:journl:v:61:y:2016:i:208:p:73-92. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Goran Petrić (email available below). General contact details of provider: https://edirc.repec.org/data/efbeoyu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.