Impact of Selective Reductions in Labor Taxation

Pierard Olivier
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Pierard Olivier: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)
Authors registered in the RePEc Author Service: Olivier Pierrard

No 2004035, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: To study the impacts of reductions in employer’s social security contributions, we construct an intertemporal general equilibrium model with different types of workers (and wages), search unemployment and endogenous job destruction rates. Our model reproduces the empirical evidence that the impacts on employment, of reductions in contributions at the minimum wage level, go through a decrease in job destructions rather than an increase in job creations. We moreover find that, although it is prejudical to average productivity, reductions targeted at the minimum wage create much more net employment than reductions targeted at other wages.

Keywords: Labor taxation; Job destruction rate; Employment (search for similar items in EconPapers)
JEL-codes: E24 E62 H25 J38 (search for similar items in EconPapers)
Date: 2004-10-01
New Economics Papers: this item is included in nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2004035

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