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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

Author

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

Abstract

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.

Suggested Citation

  • Buscher, Herbert S. & Buslei, Hermann & Göggelmann, Klaus & Koschel, Henrike & Ramb, Fred & Schmidt, Tobias F. N. & Steiner, Viktor & Winker, Peter, 1998. "Empirical macromodels under test: a comparative simulation study of the employment effects of a revenue neutral cut in social security contributions," ZEW Discussion Papers 98-40, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5211
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    Cited by:

    1. Nico Pestel & Eric Sommer, 2013. "Shifting Taxes from Labor to Consumption: Efficient, but Regressive?," SOEPpapers on Multidisciplinary Panel Data Research 624, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Schmähl, Winfried, 2006. "Aufgabenadäquate Finanzierung der Sozialversicherung durch Beiträge und Steuern: Begründungen und Wirkungen eines Abbaus der Fehlfinanzierung in Deutschland," Working papers of the ZeS 05/2006, University of Bremen, Centre for Social Policy Research (ZeS).
    3. Ciminelli, Gabriele & Ernst, Ekkehard & Merola, Rossana & Giuliodori, Massimo, 2019. "The composition effects of tax-based consolidation on income inequality," European Journal of Political Economy, Elsevier, vol. 57(C), pages 107-124.
    4. Nico Pestel & Eric Sommer, 2017. "Shifting Taxes from Labor to Consumption: More Employment and more Inequality?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 542-563, September.
    5. Feil, Michael & Klinger, Sabine & Zika, Gerd, 2006. "Sozialabgaben und Beschäftigung : Simulationen mit drei makroökonomischen Modellen," IAB-Discussion Paper 200622, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Mahdi Amini, 2017. "The Relationship Between Beauty and Metaphysics in the Theory of Saint Tomas Aquinas," European Journal of Multidisciplinary Studies Articles, Revistia Research and Publishing, vol. 2, ejms_v2_i.

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    More about this item

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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