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The Incidence of Payroll Taxation: Evidence from Chile

Author

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  • Gruber, Jonathan

Abstract

The author provides new evidence on the incidence of payroll taxation by examining the experience of Chile before and after the privatization of its Social Security system. This policy change led to a sharp exogenous reduction in the payroll tax burden on Chilean firms; on average, payroll tax rates fell by 25 percent over six years. Using data from a census of manufacturing firms, the author estimates that the incidence of payroll taxation is fully on wages, with no effect on employment. This finding is robust to a variety of empirical approaches to the problem of measurement error in firm-level measures of taxes/worker. Copyright 1997 by University of Chicago Press.

Suggested Citation

  • Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
  • Handle: RePEc:ucp:jlabec:v:15:y:1997:i:3:p:s72-101
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    References listed on IDEAS

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    1. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," Working Papers 680, Princeton University, Department of Economics, Industrial Relations Section..
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    6. David Card & Alan Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," Working Papers 694, Princeton University, Department of Economics, Industrial Relations Section..
    7. David Card, 1992. "Do Minimum Wages Reduce Employment? A Case Study of California, 1987–89," ILR Review, Cornell University, ILR School, vol. 46(1), pages 38-54, October.
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    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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