Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment
In this paper we evaluate the effects of a regional experiment that reduced payroll taxes by 3-6 percentage points in Northern Finland for three years. We match each firm in the target region with a similar firm in the control region and estimate the effect of the payroll-tax reduction by comparing...
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Valtion taloudellinen tutkimuskeskus VATT
2006
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ftdoria:oai:www.doria.fi:10024/148390 2023-10-09T21:54:26+02:00 Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment Korkeamäki, Ossi Uusitalo, Roope 2006-11-21 true http://www.doria.fi/handle/10024/148390 en eng Valtion taloudellinen tutkimuskeskus VATT VATT-keskustelualoitteita 407 951-561-669-7 (nid.) 951-561-670-0 (PDF) http://www.doria.fi/handle/10024/148390 URN:ISBN:951-561-670-0 All rights reserved Payroll-tax labour demand tax incidence propensity score matching Labour market Työmarkkinat Regional development Aluekehitys Taxation Verotus Labor market and policies promoting economic growth Työmarkkinat ja kasvua tukeva politiikka J180 - Demographic Economics: Public Policy J230 - Employment Determination Job Creation Demand for Labor Self-Employment J380 - Wages Compensation and Labor Costs: Public Policy (wage subsidies minimum wage legislation) J580 - Labor-Management Relations Trade Unions and Collective Bargaining: Public Policy J650 - Unemployment Insurance Severance Pay Plant Closings J680 - Mobility Unemployment and Vacancies: Public Policy (Employment Services) B Vertaisarvioimattomat tieteelliset kirjoitukset 2006 ftdoria 2023-09-13T23:06:45Z In this paper we evaluate the effects of a regional experiment that reduced payroll taxes by 3-6 percentage points in Northern Finland for three years. We match each firm in the target region with a similar firm in the control region and estimate the effect of the payroll-tax reduction by comparing employment and wage changes within the matched pairs before and after the start of the experiment. According to our results the reduction in payroll taxes led to somewhat faster wage growth in the target region. The increase in wages offset roughly half of the impact of the payroll-tax cut on the labour costs. The remaining labour cost reduction had no significant effects on employment. Tutkimuksessa arvioidaan Lapin sotu-maksukokeilun työllisyysvaikutuksia. Kokeilu laski työn sivukuluja kolmeksi vuodeksi 3-6 prosenttiyksiköllä 14 Lapin kunnassa. Vaikutusarvio tehtiin vertaamalla kokeilualueen yritysten työllisyys- ja palkkamuutoksia vertailualueen yritysten muutoksiin ennen kokeilua ja kokeilun aikana. Vertailussa käytettiin kaltaistettujen parien menetelmää. Työn sivukulujen alentaminen johti kokeilualueen yrityksissä jonkin verran vertailualueen yrityksiä nopeampaan palkkojen nousuun. Palkkojen nousu vastasi noin puolta sotumaksujen alentamisen tuomasta työvoimakustannusten laskusta - jäljelle jäänyt työvoimakustannusten lasku ei johtanut työllisyyden kasvuun kokeilualueen yrityksissä. Other/Unknown Material Northern Finland Doria (National Library of Finland) Nousu ENVELOPE(28.634,28.634,67.158,67.158) Tukeva ENVELOPE(26.150,26.150,66.283,66.283) |
institution |
Open Polar |
collection |
Doria (National Library of Finland) |
op_collection_id |
ftdoria |
language |
English |
topic |
Payroll-tax labour demand tax incidence propensity score matching Labour market Työmarkkinat Regional development Aluekehitys Taxation Verotus Labor market and policies promoting economic growth Työmarkkinat ja kasvua tukeva politiikka J180 - Demographic Economics: Public Policy J230 - Employment Determination Job Creation Demand for Labor Self-Employment J380 - Wages Compensation and Labor Costs: Public Policy (wage subsidies minimum wage legislation) J580 - Labor-Management Relations Trade Unions and Collective Bargaining: Public Policy J650 - Unemployment Insurance Severance Pay Plant Closings J680 - Mobility Unemployment and Vacancies: Public Policy (Employment Services) |
spellingShingle |
Payroll-tax labour demand tax incidence propensity score matching Labour market Työmarkkinat Regional development Aluekehitys Taxation Verotus Labor market and policies promoting economic growth Työmarkkinat ja kasvua tukeva politiikka J180 - Demographic Economics: Public Policy J230 - Employment Determination Job Creation Demand for Labor Self-Employment J380 - Wages Compensation and Labor Costs: Public Policy (wage subsidies minimum wage legislation) J580 - Labor-Management Relations Trade Unions and Collective Bargaining: Public Policy J650 - Unemployment Insurance Severance Pay Plant Closings J680 - Mobility Unemployment and Vacancies: Public Policy (Employment Services) Korkeamäki, Ossi Uusitalo, Roope Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment |
topic_facet |
Payroll-tax labour demand tax incidence propensity score matching Labour market Työmarkkinat Regional development Aluekehitys Taxation Verotus Labor market and policies promoting economic growth Työmarkkinat ja kasvua tukeva politiikka J180 - Demographic Economics: Public Policy J230 - Employment Determination Job Creation Demand for Labor Self-Employment J380 - Wages Compensation and Labor Costs: Public Policy (wage subsidies minimum wage legislation) J580 - Labor-Management Relations Trade Unions and Collective Bargaining: Public Policy J650 - Unemployment Insurance Severance Pay Plant Closings J680 - Mobility Unemployment and Vacancies: Public Policy (Employment Services) |
description |
In this paper we evaluate the effects of a regional experiment that reduced payroll taxes by 3-6 percentage points in Northern Finland for three years. We match each firm in the target region with a similar firm in the control region and estimate the effect of the payroll-tax reduction by comparing employment and wage changes within the matched pairs before and after the start of the experiment. According to our results the reduction in payroll taxes led to somewhat faster wage growth in the target region. The increase in wages offset roughly half of the impact of the payroll-tax cut on the labour costs. The remaining labour cost reduction had no significant effects on employment. Tutkimuksessa arvioidaan Lapin sotu-maksukokeilun työllisyysvaikutuksia. Kokeilu laski työn sivukuluja kolmeksi vuodeksi 3-6 prosenttiyksiköllä 14 Lapin kunnassa. Vaikutusarvio tehtiin vertaamalla kokeilualueen yritysten työllisyys- ja palkkamuutoksia vertailualueen yritysten muutoksiin ennen kokeilua ja kokeilun aikana. Vertailussa käytettiin kaltaistettujen parien menetelmää. Työn sivukulujen alentaminen johti kokeilualueen yrityksissä jonkin verran vertailualueen yrityksiä nopeampaan palkkojen nousuun. Palkkojen nousu vastasi noin puolta sotumaksujen alentamisen tuomasta työvoimakustannusten laskusta - jäljelle jäänyt työvoimakustannusten lasku ei johtanut työllisyyden kasvuun kokeilualueen yrityksissä. |
format |
Other/Unknown Material |
author |
Korkeamäki, Ossi Uusitalo, Roope |
author_facet |
Korkeamäki, Ossi Uusitalo, Roope |
author_sort |
Korkeamäki, Ossi |
title |
Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment |
title_short |
Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment |
title_full |
Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment |
title_fullStr |
Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment |
title_full_unstemmed |
Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment |
title_sort |
employment effects of a payroll-tax cut: evidence from a regional tax exemption experiment |
publisher |
Valtion taloudellinen tutkimuskeskus VATT |
publishDate |
2006 |
url |
http://www.doria.fi/handle/10024/148390 |
long_lat |
ENVELOPE(28.634,28.634,67.158,67.158) ENVELOPE(26.150,26.150,66.283,66.283) |
geographic |
Nousu Tukeva |
geographic_facet |
Nousu Tukeva |
genre |
Northern Finland |
genre_facet |
Northern Finland |
op_relation |
VATT-keskustelualoitteita 407 951-561-669-7 (nid.) 951-561-670-0 (PDF) http://www.doria.fi/handle/10024/148390 URN:ISBN:951-561-670-0 |
op_rights |
All rights reserved |
_version_ |
1779318000388669440 |