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Empirical macromodels under test: a comparative simulation study of the employment effects of a revenue neutral cut in social security contributions

  • Buscher, Herbert S.
  • Buslei, Hermann
  • Göggelmann, Klaus
  • Koschel, Henrike
  • Ramb, Fred
  • Schmidt, Tobias F. N.
  • Steiner, Viktor
  • Winker, Peter

In the paper we simulate a revenue-neutral cut in the social security contribution rate using five different types of macro- / microeconomic models, namely two models based on time-series data where the labour market is modelled basically demand oriented, two models of the class of computable equilibrium models which are supply oriented and finally a firm specific model for international tax burden comparisons. Our primary interest is in the employment effects the models predict due to the cut in the contribution rate. It turns out that qualitatively all models considered predict an increase in employment three years after the cut. But the employment effects differ considerably in magnitude, which follows immediately from the different behavioral assumptions underlying the different models.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 98-40.

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Date of creation: 1998
Date of revision:
Handle: RePEc:zbw:zewdip:5211
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  1. Lans Bovenberg, A. & de Mooij, Ruud A., 1994. "Environmental taxes and labor-market distortions," European Journal of Political Economy, Elsevier, vol. 10(4), pages 655-683, December.
  2. Pissarides, Christopher A., 1998. "The impact of employment tax cuts on unemployment and wages; The role of unemployment benefits and tax structure," European Economic Review, Elsevier, vol. 42(1), pages 155-183, January.
  3. Göggelmann, Klaus & Franz, Wolfgang & Winker, Peter, 1997. "Einige Wirkungen von steuerlichen Umfinanzierungsmaßnahmen in einem makroökonometrischen Ungleichgewichtsmodell für die westdeutsche Volkswirtschaft," ZEW Discussion Papers 97-19, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
  5. Fair, Ray C & Jaffee, Dwight M, 1972. "Methods of Estimation for Markets in Disequilibrium," Econometrica, Econometric Society, vol. 40(3), pages 497-514, May.
  6. Franz, Wolfgang & Konig, Heinz, 1990. "A disequilibrium approach to unemployment in the Federal Republic of Germany," European Economic Review, Elsevier, vol. 34(2-3), pages 413-422, May.
  7. Broer, Peter D. & Lassila, Jukka, . "Pension Policies and Public Debt in Dynamic CGE Models," ETLA A, The Research Institute of the Finnish Economy, number 23.
  8. Hans Fehr, 1997. "Belastungswirkungen der aktuellen Reformvorschläge zur Einkommensbesteuerung und zur Alterssicherung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 66(3-4), pages 362-381.
  9. Bovenberg, A.L. & de Mooij, R.A., 1994. "Environmental levies and distortionary taxation," Other publications TiSEM 4b32deaa-ec2f-4de7-b59b-9, Tilburg University, School of Economics and Management.
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  11. 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.
  12. Capros, P. & Karadeloglou, P. & Mentzas, G., 1990. "An empirical assessment of macroeconometric and CGE approaches in policy modeling," Journal of Policy Modeling, Elsevier, vol. 12(3), pages 557-585.
  13. repec:cup:cbooks:9780521266550 is not listed on IDEAS
  14. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
  15. Lars Peter Hansen & James J. Heckman, 1996. "The Empirical Foundations of Calibration," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 87-104, Winter.
  16. Conrad, Klaus & Schmidt, Tobias F. N., 1997. "Double dividend of climate protection and the role of international policy coordination in the EU: an applied general equilibrium analysis with the GEM-E3 model," ZEW Discussion Papers 97-26, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  17. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-51, September.
  18. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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