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The response of labour taxation to changes in government debt

Author

Listed:
  • 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
    Note: 564550
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1307.pdf
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    References listed on IDEAS

    as
    1. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    2. Trabandt, Mathias & Attinasi, Maria Grazia & Stark, Jürgen & Lalouette, Laure & Nickel, Christiane & Valenta, Vilém & van Riet, Ad & Leiner-Killinger, Nadine & Afonso, António & Warmedinger, Thomas & , 2010. "Euro area fiscal policies and the crisis," Occasional Paper Series 109, European Central Bank.
    3. 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. Gabriela Castro & José R. Maria & Ricardo Mourinho Félix & Vanda Almeida, 2011. "Fiscal policy in a small euro area economy," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

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    More about this item

    Keywords

    Debt; fiscal adjustment; labour taxes;
    All these keywords.

    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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