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The response of labour taxation to changes in government debt

Author

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  • Leiner-Killinger, Nadine
  • Slavík, Michal
  • Holm-Hadulla, Fédéric

Abstract

This paper investigates the relationship between government debt and labour taxation for a panel of 18 EU countries over the period 1979-2008. The econometric estimates point to a statistically significant and economically relevant positive response of labour taxation to changes in the general government debt and interest expenditure-to-GDP ratios. The results are robust across a range of econometric specifications and labour tax indicators. JEL Classification: H2, H24, H63, J22

Suggested Citation

  • Leiner-Killinger, Nadine & Slavík, Michal & Holm-Hadulla, Fédéric, 2011. "The response of labour taxation to changes in government debt," Working Paper Series 1307, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20111307
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1307.pdf
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    References listed on IDEAS

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    1. van Riet, Ad, 2010. "Euro area fiscal policies and the crisis," Occasional Paper Series 109, European Central Bank.
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    Cited by:

    1. Pica, Federico & Villani, Salvatore, 2012. "Debito, Mezzogiorno e sviluppo. A trivial exercise
      [Sovereign Debt Sustainability, Mezzogiorno and Economic Growth. A Trivial Exercise]
      ," MPRA Paper 43199, University Library of Munich, Germany, revised 28 Nov 2012.
    2. Vanda Almeida & Gabriela Lopes de Castro & Ricardo Mourinho Félix & José R. Maria, 2011. "Fiscal policy in a small euro area economy," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.

    More about this item

    Keywords

    Debt; fiscal adjustment; labour taxes;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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