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Labor Taxation in the Western Balkan: Looking Back and Forward

Author

Listed:
  • Mr. Alain Jousten
  • Mario Mansour
  • Irena Jankulov Suljagic
  • Charles Vellutini

Abstract

This paper examines how labor taxation (personal income taxes and social security contributions) in the Western Balkan contributes to labor market outcomes such as high informality and a significant gender gap in participation rates. We find that limited progressivity combined with high tax wedge on low incomes poses a major twin equity-efficiency challenge in the region, resulting in low redistributive capacity and inadequate incentives to enter the job market. Policy implications are discussed with a view to alleviating the excessively high tax wedges on low incomes, while improving progressivity of income taxation.

Suggested Citation

  • Mr. Alain Jousten & Mario Mansour & Irena Jankulov Suljagic & Charles Vellutini, 2022. "Labor Taxation in the Western Balkan: Looking Back and Forward," IMF Working Papers 2022/239, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/239
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    Keywords

    Western Balkan; labor taxation; labor tax wedge; personal income tax; corporate income tax; social security contributions; income taxation; SSC reduction; employer SSCs; Labor taxes; Tax wedge; Wages; Labor markets; Europe;
    All these keywords.

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