IDEAS home Printed from https://ideas.repec.org/a/mhr/finarc/urndoi10.1628-fa-2019-0015.html
   My bibliography  Save this article

Cutting the Labor Tax Wedge in Hard Times. Evidence from an Italian Reform

Author

Listed:
  • Massimo Bordignon
  • Marie-Luise Schmitz
  • Gilberto Turati

Abstract

As the first step of a strategy aimed at implementing a fiscal devaluation, in 2007, the Italian government implemented a reform reducing the labor tax wedge to boost firms' competitiveness. In this paper, we provide evidence on the causal impact on employment of this reform by estimating a DDD model that exploits differences across geographical areas and sectors of economic activity in the tax allowances. We find mildly positive effects of the reform on employment. We interpret this result by observing that the magnitude of the tax incentive was too small for firms to substantially increase the number of workers.

Suggested Citation

  • Massimo Bordignon & Marie-Luise Schmitz & Gilberto Turati, 2019. "Cutting the Labor Tax Wedge in Hard Times. Evidence from an Italian Reform," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 75(3), pages 266-296.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2019-0015
    DOI: 10.1628/fa-2019-0015
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/cutting-the-labor-tax-wedge-in-hard-times-evidence-from-an-italian-reform-101628fa-2019-0015
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    File URL: https://libkey.io/10.1628/fa-2019-0015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. D'ANDRIA Diego & DEBACKER Jason & EVANS Richard W. & PYCROFT Jonathan & ZACHLOD-JELEC Magdalena, 2021. "Taxing income or consumption: macroeconomic and distributional effects for Italy," JRC Working Papers on Taxation & Structural Reforms 2021-13, Joint Research Centre (Seville site).

    More about this item

    Keywords

    labor tax wedge; payroll tax; fiscal devaluation; Italy;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    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:mhr:finarc:urn:doi:10.1628/fa-2019-0015. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/fa .

    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.