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Job search under changing labour taxes

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  • Bryson, Alex
  • Dale-Olsen, Harald

Abstract

Workers’ job mobility decisions are related to firms’ wage policies but also depend on tax schedules. Using Norwegian population-wide administrative linked employer-employee data for 2010–2019, we study how the job-to-job turnover of employees is affected by marginal taxes and firms’ pay policies, thus drawing inferences on job search behaviour. By paying higher wages, job-to-job separation rates drop, but this negative relationship is weakened when income taxes increase, consistent with higher taxes reducing search activity. However, consistent with theory, the tax effect is smaller where workers receive performance bonuses.

Suggested Citation

  • Bryson, Alex & Dale-Olsen, Harald, 2025. "Job search under changing labour taxes," Labour Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:labeco:v:95:y:2025:i:c:s0927537125000740
    DOI: 10.1016/j.labeco.2025.102750
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    Keywords

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    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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