Do regional payroll tax reductions boost employment?
2009 (English)In: Labour Economics, ISSN 0927-5371, Vol. 16, no 5, 480-489 p.Article in journal (Refereed) Published
Using a Difference-in-Differences approach, we evaluate the effects of a 10 percentage point reduction in the payroll tax introduced in 2002 in northern Sweden. We find no employment effects among firms existing both before and after the reform, whereas the average wage bill per employee increases by about 0.25% per percentage point reduction in the tax rate. Extending the analysis to include entry and exit of firms, we find evidence of positive effects on the number of firms and a tendency to positive employment effects. Moreover, the wage incidence estimates become insignificant when we account for entry and exit of firms.
Place, publisher, year, edition, pages
2009. Vol. 16, no 5, 480-489 p.
Labour tax, Labour demand, Incidence, Firm entry/exit, Difference-in-Differences
Economics and Business
IdentifiersURN: urn:nbn:se:uu:diva-148286DOI: 10.1016/j.labeco.2009.04.003ISI: 000270163200002OAI: oai:DiVA.org:uu-148286DiVA: diva2:401840