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Reducing social contributions on unskilled labour as a way of fighting unemployment: An empirical evaluation for the case of Spain

In this paper we provide an empirical evaluation of the effects of a cut in social security contributions (i) for all types of labour, and (ii) only for unskilled labour, within a computable general equilibrium model simulated for the Spanish economy. The model allows firms to follow a non-competitive price rule, and incorporates an equal yield assumption, which means that the reduction in social security contributions is compensated with an increase in value-added tax rates, so that the public sector deficit is not affected. In addition, the labour market is assumed to follow a matching unemployment rule, which allows to model in a simple way any frictions present in that market.

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File URL: ftp://ftp.econ.unavarra.es/pub/DocumentosTrab/DT0102.PDF
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Paper provided by Departamento de Economía - Universidad Pública de Navarra in its series Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra with number 0102.

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Length: 32 pages
Date of creation: 2001
Date of revision:
Publication status: Published in
Handle: RePEc:nav:ecupna:0102
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  1. Dreze, Jacques H. & Malinvaud, Edmond, 1994. "Growth and employment: The scope of a European initiative," European Economic Review, Elsevier, vol. 38(3-4), pages 489-504, April.
  2. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
  3. Dervis, Kemal & de Melo, Jaime & Robinson, Sherman, 1981. "A General Equilibrium Analysis of Foreign Exchange Shortages in a Developing Economy," Economic Journal, Royal Economic Society, vol. 91(364), pages 891-906, December.
  4. Inmaculada Garcia & Jose Alberto Molina, 1998. "Household labour supply with rationing in Spain," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1557-1570.
  5. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
  6. James R. Markusen, 1990. "Micro-foundations of External Economies," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 495-508, August.
  7. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-38, March.
  8. P. B. Sørensen, 1997. "Public finance solutions to the European unemployment problem?," Economic Policy, CEPR;CES;MSH, vol. 12(25), pages 221-264, October.
  9. Shoven, John B. & Whalley, John, 1977. "Equal yield tax alternatives : General equillibrium computational techniques," Journal of Public Economics, Elsevier, vol. 8(2), pages 211-224, October.
  10. Balistreri, Edward J., 2002. "Operationalizing equilibrium unemployment: A general equilibrium external economies approach," Journal of Economic Dynamics and Control, Elsevier, vol. 26(3), pages 347-374, March.
  11. Stephen Nickell & Brian Bell, 1996. "Would cutting payroll taxes on the unskilled have a significant effect on unemployment?," LSE Research Online Documents on Economics 20687, London School of Economics and Political Science, LSE Library.
  12. Alfredo M. Pereira, 1995. "Equal Yield Tax Alternatives and Government Deficits," Public Finance Review, , vol. 23(1), pages 40-71, January.
  13. repec:cup:cbooks:9780521070935 is not listed on IDEAS
  14. P. BISCOURP & Ch. GIANELLA, 2001. "Substitution and complementarity between capital, skilled and less skilled workers: an analysis at the firm level in the French manufacturing industry," Documents de Travail de la DESE - Working Papers of the DESE g2001-13, Institut National de la Statistique et des Etudes Economiques, DESE.
  15. Dougherty, C R S, 1972. "Estimates of Labor Aggregation Functions," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1101-19, Nov.-Dec..
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