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Tax policy and OECD unemployment
Author(s)
Date Issued
2002-12
Date Available
2009-07-22T15:50:58Z
Abstract
The effect of changes in payroll taxes on wages is a question of tax incidence. If workers can shift the burden of taxation onto employers, in the form of higher wages, we may expect increases in unemployment. This paper examines the extent to which workers succeed in shifting the burden of taxation onto employers and therefore the effects on unemployment of higher direct taxes. A reduced form vector autoregression model is used to estimate the effects, of a shock to direct taxes, on both wages and unemployment. The empirical estimates, estimated separately for eleven OECD countries, show workers failing to shift the burden of higher taxes and consequently insignificant changes in unemployment.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP02/31
Subject – LCSH
Fiscal policy--OECD countries
Unemployment--OECD countries
Unemployment--Effect of wages on
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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