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Employment Effects of Payroll Taxes - An Empirical Test for Germany

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  • Bauer, Thomas K.

    () (RWI)

  • Riphahn, Regina T.

    () (University of Erlangen-Nuremberg)

Abstract

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

Suggested Citation

  • Bauer, Thomas K. & Riphahn, Regina T., 1998. "Employment Effects of Payroll Taxes - An Empirical Test for Germany," IZA Discussion Papers 11, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp11
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    References listed on IDEAS

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    1. 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.
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    Citations

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    Cited by:

    1. Adam Wagstaff, 2010. "Social health insurance reexamined," Health Economics, John Wiley & Sons, Ltd., vol. 19(5), pages 503-517.
    2. Sven Schreiber, 2012. "Estimating the natural rate of unemployment in euro-area countries with co-integrated systems," Applied Economics, Taylor & Francis Journals, vol. 44(10), pages 1315-1335, April.
    3. Sonia A. Agudelo & Hector Sala, 2016. "Wage setting in the Colombian manufacturing industry," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(1), pages 99-134, January.
    4. Kemmerling, Achim, 2002. "The employment effects of different regimes of welfare state taxation: An empirical analysis of core OECD countries," MPIfG Discussion Paper 02/8, Max Planck Institute for the Study of Societies.
    5. repec:elg:ejeepi:v:14:y:2017:i:1:p92-116 is not listed on IDEAS
    6. Immervoll, Herwig, 2002. "The distribution of average and marginal effective tax rates in European Union Member States," EUROMOD Working Papers EM2/02, EUROMOD at the Institute for Social and Economic Research.
    7. Skedinger, Per, 2014. "Effects of Payroll Tax Cuts for Young Workers," Working Paper Series 1031, Research Institute of Industrial Economics.
    8. Vincent Charlet & Philippe Frocrain, 2017. "Les limites des allégements de charges sur les bas salaires," Working Papers hal-01695167, HAL.
    9. Daniela Sonedda, 2006. "A structural VAR approach on labour taxation policies," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 95-114.
    10. Leila E. Davis & Charalampos Konstantinidis & Yorghos Tripodis, 2017. "A proposal for a federalized unemployment insurance mechanism for Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(1), pages 92-116, April.
    11. Dieckhoener, Caroline & Peichl, Andreas, 2009. "Financing Social Security: Simulating Different Welfare State Systems for Germany," IZA Discussion Papers 4135, Institute for the Study of Labor (IZA).
    12. Thalmaier, Anja, 1999. "Bestimmungsgründe von Fehlzeiten: Welche Rolle spielt die Arbeitslosigkeit?," IZA Discussion Papers 62, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    unemployment; payroll tax; dynamic labor demand; social insurance;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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