IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11.html
   My bibliography  Save this paper

Employment Effects of Payroll Taxes - An Empirical Test for Germany

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp11.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    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.
    2. 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.
    3. 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 341-368.
    4. 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.
    5. Machin, Stephen & Manning, Alan, 1997. "Minimum wages and economic outcomes in Europe," European Economic Review, Elsevier, vol. 41(3-5), pages 733-742, April.
    6. Gruber, Jonathan, 1997. "The Incidence of Payroll Taxation: Evidence from Chile," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 72-101, July.
    7. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-641, June.
    8. Nadiri, M Ishaq & Rosen, Sherwin, 1969. "Interrelated Factor Demand Functions," American Economic Review, American Economic Association, vol. 59(4), pages 457-471, Part I Se.
    9. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
    10. 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.
    11. repec:hal:journl:halshs-00353896 is not listed on IDEAS
    12. 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.
    13. Jonathan Gruber & Alan B. Krueger, 1991. "The Incidence of Mandated Employer-Provided Insurance: Lessons from Workers' Compensation Insurance," NBER Chapters,in: Tax Policy and the Economy, Volume 5, pages 111-144 National Bureau of Economic Research, Inc.
    14. Schmidt, Christoph M, 1994. "Relative Wage Effects of German Unions," CEPR Discussion Papers 918, C.E.P.R. Discussion Papers.
    15. Nickell, Stephen & Nicolitsas, D., 1994. "Wages," LSE Research Online Documents on Economics 51644, London School of Economics and Political Science, LSE Library.
    16. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    17. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-183, May.
    18. 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.
    19. Konig, Heinz & Pohlmeier, Winfried, 1988. "Employment, Labour Utilization and Procyclical Labour Productivity," Kyklos, Wiley Blackwell, vol. 41(4), pages 551-572.
    20. 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.
    21. Keane, Michael P & Prasad, Eswar S, 1996. "The Employment and Wage Effects of Oil Price Changes: A Sectoral Analysis," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 389-400, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp11. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak). General contact details of provider: http://www.iza.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.