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Employment Effects of Payroll Taxes - An Empirical Test for Germany

Author Info

Listed author(s):
  • 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

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File URL: http://ftp.iza.org/dp11.pdf
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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
Publication status: published in: Applied Economics, 2002, 34 (7), 865-876
Handle: RePEc:iza:izadps:dp11
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IZA, P.O. Box 7240, D-53072 Bonn, Germany

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

Other versions of this item:

Find related papers by 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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  1. Machin, Stephen & Manning, Alan, 1997. "Minimum wages and economic outcomes in Europe," European Economic Review, Elsevier, vol. 41(3-5), pages 733-742, April.
  2. 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.
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  4. repec:hal:journl:halshs-00353896 is not listed on IDEAS
  5. 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.
  6. Schmidt, Christoph M, 1994. "Relative Wage Effects of German Unions," CEPR Discussion Papers 918, C.E.P.R. Discussion Papers.
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  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;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(2), pages 258-272, June.
  9. 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.
  10. 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.
  11. Konig, Heinz & Pohlmeier, Winfried, 1988. "Employment, Labour Utilization and Procyclical Labour Productivity," Kyklos, Wiley Blackwell, vol. 41(4), pages 551-572.
  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. 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.
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  15. 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.
  16. 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.
  17. 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.
  18. 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.
  19. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-641, June.
  20. 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.
  21. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-183, May.
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Cited by:

  1. Caroline Dieckhoener & Andreas Peichl, 2009. "Financing Social Security: Simulating Different Welfare State Systems for Germany," SOEPpapers on Multidisciplinary Panel Data Research 180, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Thalmaier, Anja, 1999. "Bestimmungsgründe von Fehlzeiten: Welche Rolle spielt die Arbeitslosigkeit?," IZA Discussion Papers 62, Institute for the Study of Labor (IZA).
  3. Leila E. Davis & Charalampos Konstantinidis & Yorghos Tripodis, 2015. "A proposal for a federalized unemployment insurance mechanism for Europe," Working Papers 2015_02, University of Massachusetts Boston, Economics Department.
  4. Adam Wagstaff, 2010. "Social health insurance reexamined," Health Economics, John Wiley & Sons, Ltd., vol. 19(5), pages 503-517.
  5. 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.
  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. 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, 01.
  8. Skedinger, Per, 2014. "Effects of Payroll Tax Cuts for Young Workers," Working Paper Series 1031, Research Institute of Industrial Economics.
  9. 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.
  10. Daniela Sonedda, 2006. "A structural VAR approach on labour taxation policies," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 95-114.

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