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Firm heterogeneity and the impact of payroll taxes

Author

Listed:
  • Anikó Bíró

    (Institute for Fiscal Studies)

  • Réka Branyiczki
  • Attila Lindner

    (Institute for Fiscal Studies)

  • Lili Márk
  • Dániel Prinz

    (Institute for Fiscal Studies)

Abstract

We study the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, we examine the heterogeneous impact of the policy. Employment increases most at low-productivity firms offering low-wage jobs, which tend to hire from unemployment, while the effects are more muted for high-productivity firms offering high-wage jobs. At the same time, wages only increase at high-productivity firms. These results point to important heterogeneity in the incidence of payroll tax cuts across firms and highlight that payroll taxes have a significant impact on the composition of jobs in the labor market.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Anikó Bíró & Réka Branyiczki & Attila Lindner & Lili Márk & Dániel Prinz, 2022. "Firm heterogeneity and the impact of payroll taxes," IFS Working Papers W22/49, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:22/49
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    References listed on IDEAS

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    Cited by:

    1. Guo, Audrey, 2024. "Payroll tax incidence: Evidence from unemployment insurance," Journal of Public Economics, Elsevier, vol. 239(C).

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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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