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Labor Taxation And Investment In Developed Countries. The Impact On Employment

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  • Michael MITSOPOULOS

    (Ph.D. Boston University. Director of Business Environment and Regulatory Affairs, SEV Hellenic Federation of Enterprises, Greece.)

  • Theodore PELAGIDIS

    (Professor of Economics, University of Piraeus, Dpt of Maritime St. and Deputy Governor, Bank of Greece. pelagidi@unipi.gr ,)

Abstract

One of the main topics highlighted in the field of economic policy applications is the impact of taxation on labor. In an era in which macroeconomic stability, technological change and globalization pressure the job market, there exists no strong consensus in the literature on how exactly taxation influences growth, choice between work and leisure, share of income attributed to labor or participation in different job market segments. Focusing on employment levels and using the results of the World Economic Forum (WEF) executive opinion survey (EOS) between 2013-2017 we bypass several challenges often faced in the literature. By doing so, we complement the insights of the existing literature by establishing that, in institutionally mature countries, taxation that is deemed by a survey of business executives to pose a disincentive to work, reduces employment. At the same time, such countries can also rely on the taxation of investment and the flexibility of wages to influence employment levels, unlike less competitive countries.

Suggested Citation

  • Michael MITSOPOULOS & Theodore PELAGIDIS, 2021. "Labor Taxation And Investment In Developed Countries. The Impact On Employment," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 13-31, June.
    • Handle: RePEc:hrs:journl:v:xiii:y:2021:i:2:p:13-31
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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