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Employment effects of payroll taxes - an empirical test for Germany

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  • Thomas Bauer
  • Regina Riphahn

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) a system of five dynamic factor demand equations is estimated. Various simulations indicate that the employment effects of payroll taxes are minimal.

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  • Thomas Bauer & Regina Riphahn, 2002. "Employment effects of payroll taxes - an empirical test for Germany," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 865-876.
    • Handle: RePEc:taf:applec:v:34:y:2002:i:7:p:865-876
    DOI: 10.1080/00036840110058914
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    Cited by:

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    2. 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.
    3. 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.
    4. Skedinger, Per, 2014. "Effects of Payroll Tax Cuts for Young Workers," Working Paper Series 1031, Research Institute of Industrial Economics.
    5. Thomas Leoni & Margit Schratzenstaller-Altzinger, 2020. "Senkung der Lohnnebenkosten und Finanzierungsvarianten. Bisherige Erkenntnisse und internationale Reformbeispiele," WIFO Studies, WIFO, number 66851.
    6. Leila E. Davis & Charalampos Konstantinidis & Yorghos Tripodis, 2017. "A proposal for a federalized unemployment insurance mechanism for Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(1), pages 92-116, April.
    7. Dieckhoener, Caroline & Peichl, Andreas, 2009. "Financing Social Security: Simulating Different Welfare State Systems for Germany," IZA Discussion Papers 4135, Institute of Labor Economics (IZA).
    8. Sven-Olov Daunfeldt & Anton Gidehag & Niklas Rudholm, 2021. "How Do Firms Respond to Reduced Labor Costs? Evidence from the 2007 Swedish Payroll Tax Reform," Journal of Industry, Competition and Trade, Springer, vol. 21(3), pages 315-338, September.
    9. Hörnig, Lukas, 2023. "Regional employment effects of the Hartz-reforms," Ruhr Economic Papers 1033, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. 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.
    11. Guisan, M.C. & Aguayo, E., 2006. "Employment by Sector in the European Union, the United States, Mexico and Canada, 1985-2005," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 6(1), pages 21-34.
    12. 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, January.
    13. ZEW - Zentrum für Europäische Wirtschaftsforschung (Mannheim) (ed.), 2006. "Evaluation der Maßnahmen zur Umsetzung der Vorschläge der Hartz-Kommission. Arbeitspaket 1: Wirksamkeit der Instrumente. Modul 1d: Eingliederungszuschüsse und Entgeltsicherung. Endbericht," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110487.
    14. Vincent Charlet & Philippe Frocrain, 2017. "Les limites des allégements de charges sur les bas salaires," Working Papers hal-01695167, HAL.
    15. Daniela Sonedda, 2006. "A structural VAR approach on labour taxation policies," Applied Economics, Taylor & Francis Journals, vol. 38(1), pages 95-114.
    16. Thalmaier, Anja, 1999. "Bestimmungsgründe von Fehlzeiten: Welche Rolle spielt die Arbeitslosigkeit?," IZA Discussion Papers 62, Institute of Labor Economics (IZA).

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    More about this item

    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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