Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment
In this paper we evaluate the effects of a regional experiment that reduced payroll-taxes by 3–6 percentage points for three years in Northern Finland. We match each firm in the target region with a similar firm in a comparison region and estimate the effect of the payroll-tax reduction by compari...
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ftrepec:oai:RePEc:fer:dpaper:443 2024-04-14T08:16:33+00:00 Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment Korkeamäki, Ossi Uusitalo, Roope https://www.doria.fi/handle/10024/148431 unknown https://www.doria.fi/handle/10024/148431 preprint ftrepec 2024-03-19T10:24:33Z In this paper we evaluate the effects of a regional experiment that reduced payroll-taxes by 3–6 percentage points for three years in Northern Finland. We match each firm in the target region with a similar firm in a comparison 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 the payroll-taxes led to an increase in wages in the target region. The point estimates indicate that the increase in wages offset roughly half of the impact of the payroll tax cut on the labor costs. The remaining labor cost reduction had no significant effects on employment. JEL-codes: J18, J23, J38, J58, J65, J6 Payroll-tax, Labor 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 Report Northern Finland RePEc (Research Papers in Economics) Tukeva ENVELOPE(26.150,26.150,66.283,66.283) |
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RePEc (Research Papers in Economics) |
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In this paper we evaluate the effects of a regional experiment that reduced payroll-taxes by 3–6 percentage points for three years in Northern Finland. We match each firm in the target region with a similar firm in a comparison 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 the payroll-taxes led to an increase in wages in the target region. The point estimates indicate that the increase in wages offset roughly half of the impact of the payroll tax cut on the labor costs. The remaining labor cost reduction had no significant effects on employment. JEL-codes: J18, J23, J38, J58, J65, J6 Payroll-tax, Labor 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 |
format |
Report |
author |
Korkeamäki, Ossi Uusitalo, Roope |
spellingShingle |
Korkeamäki, Ossi Uusitalo, Roope Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment |
author_facet |
Korkeamäki, Ossi Uusitalo, Roope |
author_sort |
Korkeamäki, Ossi |
title |
Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment |
title_short |
Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment |
title_full |
Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment |
title_fullStr |
Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment |
title_full_unstemmed |
Employment and Wage Effects of a Payroll-Tax Cut-Evidence from a Regional Experiment |
title_sort |
employment and wage effects of a payroll-tax cut-evidence from a regional experiment |
url |
https://www.doria.fi/handle/10024/148431 |
long_lat |
ENVELOPE(26.150,26.150,66.283,66.283) |
geographic |
Tukeva |
geographic_facet |
Tukeva |
genre |
Northern Finland |
genre_facet |
Northern Finland |
op_relation |
https://www.doria.fi/handle/10024/148431 |
_version_ |
1796315254320267264 |