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Labour Taxation and Its Impact on Employment Growth

Author

Listed:
  • Primoz Dolenc

    (University of Primorska, Slovenia)

  • Suzana Laporsek

    (University of Primorska, Slovenia)

Abstract

The paper aims to assess the characteristics of labour taxation for five different groups of workers and labour market performance (in terms of employment and unemployment rate) in the EU and to examine whether tax wedge affects employment growth in the EU. The descriptive empirical estimates show that the level of labour taxation varies greatly across EU Member States, by which the tax wedge tends to be higher among NewMember States (excluding Cyprus andMalta). Furthermore, the panel regression analyses confirm statistically significant negative relationship between tax wedge and employment growth in the EU as a whole. Therefore, the empirical analysis suggests that the EU-27 should continue with the trend of reducing tax wedge, as this would have favourable effects on labour market performance, especially among New Member States.

Suggested Citation

  • Primoz Dolenc & Suzana Laporsek, 2012. "Labour Taxation and Its Impact on Employment Growth," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 10(3 (Fall)), pages 301-318.
    • Handle: RePEc:mgt:youmgt:v:10:y:2012:i:3:p:301-318
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    File URL: http://www.fm-kp.si/zalozba/ISSN/1581-6311/10_301-318.pdf
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    References listed on IDEAS

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    Cited by:

    1. Madalina Ecaterina Popescu & Eva Militaru & Larisa Stanila & Maria Denisa Vasilescu & Amalia Cristescu, 2019. "Flat-Rate versus Progressive Taxation? An Impact Evaluation Study for the Case of Romania," Sustainability, MDPI, vol. 11(22), pages 1-16, November.

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    More about this item

    Keywords

    labour taxation; employment growth; labour market; economic policy; European Union;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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