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The future of taxation in changing labour markets

Author

Listed:
  • Michael Christl

    (European Commission, Joint Research Centre and Loyola University Andalusia, Sevilla, Spain)

  • Ilias Livanos

    (European Centre for the Development of Vocational Training (CEDEFOP), Thessaloniki (Pylea), Greece)

  • Andrea Papini

    (European Commission, Joint Research Centre and Loyola University Andalusia, Sevilla, Spain)

Abstract

This paper provides a first assessment of the fiscal and distributional consequences of the ongoing structural changes in the labour markets of EU member states, mostly driven by technological progress and ageing. The Cedefop 2020 Skills forecast (including the effects of COVID-19), population projections and the forecast on pension expenditures depict a scenario of an ageing population, an inverted U-shaped unemployment trend and potentially polarising labour markets in the EU till 2030, the latter mostly driven by a surge in high-skill occupations. We make use of the microsimulation model EUROMOD and reweighting techniques to analyse the fiscal and distributional impacts of these trends under a no-policy-change assumption. The results suggest that the macro trends will increase pressure on government budgets, however, we also show that the current tax-benefit systems have the capacity to counterbalance the increases in income inequality and poverty risks triggered by the expected future labour markets developments.

Suggested Citation

  • Michael Christl & Ilias Livanos & Andrea Papini, 2023. "The future of taxation in changing labour markets," Public Sector Economics, Institute of Public Finance, vol. 47(4), pages 521-554.
    • Handle: RePEc:ipf:psejou:v:47:y:2023:i:4:p:521-554
    DOI: 10.3326/pse.47.4.7
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    References listed on IDEAS

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    1. Daron Acemoglu & Pascual Restrepo, 2017. "Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation," American Economic Review, American Economic Association, vol. 107(5), pages 174-179, May.
    2. David H. Autor & David Dorn, 2013. "The Growth of Low-Skill Service Jobs and the Polarization of the US Labor Market," American Economic Review, American Economic Association, vol. 103(5), pages 1553-1597, August.
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    More about this item

    Keywords

    income distribution; budget; deficit; job polarisation; population ageing; COVID-19;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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