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 for three years in Northern Finland. 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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Main Authors: Korkeamäki, Ossi, Uusitalo, Roope
Format: Report
Language:unknown
Subjects:
Northern Finland
Online Access:http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf
id ftrepec:oai:RePEc:hhs:ifauwp:2006_010
record_format openpolar
spelling ftrepec:oai:RePEc:hhs:ifauwp:2006_010 2024-04-14T08:16:33+00:00 Employment effects of a payroll-tax cut - evidence from a regional tax exemption experiment Korkeamäki, Ossi Uusitalo, Roope http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf unknown http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf preprint ftrepec 2024-03-19T10:35:24Z 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 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 the 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. Payroll-tax; Labour demand; Tax incidence; Propensity score matching Report Northern Finland RePEc (Research Papers in Economics)
institution Open Polar
collection RePEc (Research Papers in Economics)
op_collection_id ftrepec
language unknown
description 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 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 the 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. Payroll-tax; Labour demand; Tax incidence; Propensity score matching
format Report
author Korkeamäki, Ossi
Uusitalo, Roope
spellingShingle Korkeamäki, Ossi
Uusitalo, Roope
Employment effects of a payroll-tax cut - evidence from a regional tax exemption experiment
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
url http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf
genre Northern Finland
genre_facet Northern Finland
op_relation http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf
_version_ 1796315247917662208

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