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Effects of a reduction in employers’ Social Security contributions: Evidence from Spain

Author

Listed:
  • Pilar Campoy-Muñoz

    (Universidad Loyola Andalucía)

  • Manuel Alejandro Cardenete

    (Universidad Loyola Andalucía)

  • María del Carmen Delgado

    (Universidad Loyola Andalucía)

  • Geoffrey J.D. Hewings

    (University of Illinois)

Abstract

Programs to reduce employers‟ Social Security contributions are being widely discussed in both the political arena and academic forums as tools for promoting economic growth and boosting employment. This paper employs a Computable General Equilibrium model to assess the economic impact on the national economy of the proposals from the Spanish Confederation of Enterprise Organizations about reducing the Social Security contributions paid by employers. The results show that the proposals fail to reduce unemployment when they are combined with compensation by revenues from indirect taxes; whereas compensation through increased personal income taxes shows positive results on unemployment in exchange for decreases in private consumption.

Suggested Citation

  • Pilar Campoy-Muñoz & Manuel Alejandro Cardenete & María del Carmen Delgado & Geoffrey J.D. Hewings, 2016. "Effects of a reduction in employers’ Social Security contributions: Evidence from Spain," Working Papers 2016-001, Universidad Loyola Andalucía, Department of Economics.
    • Handle: RePEc:loy:wpaper:2016-001
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    References listed on IDEAS

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    Cited by:

    1. Luz Dary Beltrán Jaimes & Manuel Alejandro Cardenete & María del Carmen Delgado, 2017. "Medición de los efectos de un aumento del 20% de las tarifas de Estados Unidos sobre la economía mexicana a través de modelización multisectorial," Working Papers 2017-001, Universidad Loyola Andalucía, Department of Economics.

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    More about this item

    Keywords

    Computable general equilibrium models; Social security contributions; Tax reforms; Fiscal consolidation;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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