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Payroll Taxes and Firm Performance

Author

Listed:
  • Kaunitz, Niklas

    () (Stockholm University)

  • Egebark, Johan

    () (Research Institute of Industrial Economics (IFN))

Abstract

The Swedish employer paid payroll tax was reduced substantially for young workers in 2007, causing firms’ average social fees to depend on the age structure of their employees. Using pre-reform conditions to define treated and control firms, we show that the lower costs induced by the reduced taxes have no impact on exit rates or profitability. We find negligible effects on gross investments, and negative, but not statistically significant, effects on labor productivity.

Suggested Citation

  • Kaunitz, Niklas & Egebark, Johan, 2017. "Payroll Taxes and Firm Performance," Working Paper Series 1175, Research Institute of Industrial Economics, revised 13 Apr 2018.
  • Handle: RePEc:hhs:iuiwop:1175
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    File URL: http://www.ifn.se/wfiles/wp/wp1175.pdf
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    References listed on IDEAS

    as
    1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    2. repec:eee:labeco:v:55:y:2018:i:c:p:163-177 is not listed on IDEAS
    3. Egebark, Johan & Kaunitz, Niklas, 2013. "Do payroll tax cuts raise youth employment?," Working Paper Series 2013:27, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2004. "Training and the new minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages 87-94, March.
    5. Egebark, Johan & Kaunitz, Niklas, 2018. "Payroll taxes and youth labor demand," Labour Economics, Elsevier, vol. 55(C), pages 163-177.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Saez, Emmanuel & Schoefer, Benjamin & Seim, David, 2017. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," CEPR Discussion Papers 12391, C.E.P.R. Discussion Papers.
    2. Emmanuel Saez & Benjamin Schoefer & David Seim, 2017. "Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden," NBER Working Papers 23976, National Bureau of Economic Research, Inc.
    3. Marcelin Isaac & Brink Daniel & Fadiran David & Amusa Hammed, 2019. "Subsidized labour and firms: Investment, profitability, and leverage," WIDER Working Paper Series wp-2019-50, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Payroll taxes; Labor costs; Profitability; Labor productivity; Investments; Windfall gain; Tax subsidy; Firm survival;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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