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Employment and Taxes

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  • Stephen Nickell

Abstract

This paper considers the impact of taxation policy on market work. On the basis of theevidence, we find that a 10 percentage point rise in the tax wedge will reduce overall labourinput provided via the market by around 2 per cent of the population of working age. The taxwedge is the sum of the payroll, income and consumption tax rates.This only explains a minority of the market work differentials across count ries. Muchof the remainder is probably down to the differences in the social security systems supportingthe unemployed, the sick and disabled and the early retired.

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  • Stephen Nickell, 2004. "Employment and Taxes," CEP Discussion Papers dp0634, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp0634
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    More about this item

    Keywords

    Employment; Taxation; Labour Supply;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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    This paper has been announced in the following NEP Reports:

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