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Employment Effects of Payroll Taxes - An Empirical Test for Germany

  • Bauer, Thomas K.



  • Riphahn, Regina T.


    (University of Erlangen-Nuremberg)

This study tests to what degree the incidence of payroll taxes in Germany is on employment and whether in consequence payroll taxes, in particular social insurance contributions, are the culprit behind the growing unemployment problem. Using industry level data for 18 years (1977-1994) we estimate a system of five interdependent, dynamic factor demand equations. Various simulations indicate that the employment effects of payroll taxes are minimal

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 11.

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Length: 30 pages
Date of creation: Jun 1998
Date of revision:
Publication status: published in: Applied Economics, 2002, 34 (7), 865-876
Handle: RePEc:iza:izadps:dp11
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  1. Jonathan Gruber, 1995. "The Incidence of Payroll Taxation: Evidence from Chile," NBER Working Papers 5053, National Bureau of Economic Research, Inc.
  2. Machin, Stephen & Manning, Alan, 1997. "Minimum wages and economic outcomes in Europe," European Economic Review, Elsevier, vol. 41(3-5), pages 733-742, April.
  3. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
  4. Kraft, Kornelius, 1997. "Hiring and Dismissal Costs in Theory and Practice: A Comparison of Institutional Constraints and Employment Adjustment Patterns in Six OECD Countries," Kyklos, Wiley Blackwell, vol. 50(3), pages 341-68.
  5. Juan Dolado & Francis Kramarz & Steven Machin & Alan Manning & David Margolis & Coen Teulings, 1996. "The Economic Impact of Minimum Wages in Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00353896, HAL.
  6. Michael P. Keane & Eswar Prasad, 1995. "The Employment and Wage Effects of Oil Price Changes: A Sectoral Analysis," IMF Working Papers 95/37, International Monetary Fund.
  7. Schmidt, Christoph M, 1994. "Relative Wage Effects of German Unions," CEPR Discussion Papers 918, C.E.P.R. Discussion Papers.
  8. Felix FitzRoy & Michael Funke, 1994. "Real wages, investment and employment: New evidence from West German sectoral data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(2), pages 258-272, June.
  9. Hamermesh, Daniel S. & Pfann, Gerard Antonie, 1996. "Adjustment Costs in Factor Demand," CEPR Discussion Papers 1371, C.E.P.R. Discussion Papers.
  10. Stephen Nickell & D Nicolitsas, 1994. "Wages," CEP Discussion Papers dp0219, Centre for Economic Performance, LSE.
  11. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-41, June.
  12. Entorf, Horst & Konig, Heinz & Pohlmeier, Winfried, 1992. " Labor Utilization and Nonwage Labor Costs in a Disequilibrium Macro Framework," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(1), pages 71-83.
  13. Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-71, Part I Se.
  14. Jonathan Gruber & Alan Krueger, 1990. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensations Insurance," Working Papers 659, Princeton University, Department of Economics, Industrial Relations Section..
  15. Steiner, Viktor, 1996. "Employment and Wage Effects of Social Security Financing: An Empirical Analysis of the West German Experience and some Policy Simulations," ZEW Discussion Papers 96-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. Timo Tyrväinen, 1995. "Real Wage Resistance and Unemployment: Multivariate Analysis of Cointegrating Relations in 10 OECD Countries," OECD Jobs Study Working Papers 10, OECD Publishing.
  17. Flaig, Gebhard & Steiner, Viktor, 1989. "Stability and Dynamic Properties of Labour Demand in West German Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(4), pages 395-412, November.
  18. Konig, Heinz & Pohlmeier, Winfried, 1988. "Employment, Labour Utilization and Procyclical Labour Productivity," Kyklos, Wiley Blackwell, vol. 41(4), pages 551-72.
  19. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-83, May.
  20. Rossana, Robert J, 1990. "Interrelated Demands for Buffer Stocks and Productive Inputs: Estimates for Two-Digit Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 19-29, February.
  21. Hart, Robert A. & McGregor, Peter G., 1988. "The returns to labour services in West German manufacturing industry," European Economic Review, Elsevier, vol. 32(4), pages 947-963, April.
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