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Is the Impact of Labour Taxes on Unemployment asymmetric?

  • T. BERGER

    ()

  • G. EVERAERT

    ()

This paper tests whether the impact of labour taxes on unemployment is symmetric with respect to increases and decreases in labour taxes. Using a panel of 16 OECD countries over the period 1970-2005, we estimate a panel unobserved component model to account for the fact that unemployment rates and labour taxes are non-stationary but not co integrated. We find a positive impact of tax increases in European and Nordic countries but no effect of decreasing labour taxes on the rate of unemployment. For Anglo-Saxon countries, no impact of labour taxes on unemployment is found.

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File URL: http://wps-feb.ugent.be/Papers/wp_08_523.pdf
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Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 08/523.

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Length: 9 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:rug:rugwps:08/523
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Web page: http://www.ugent.be/eb

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