Labour tax progressivity and output volatility: evidence from OECD countries

Cristina Checherita-Westphal, Maria Grazia Attinasi and Malte Rieth (mrieth@diw.de)
Authors registered in the RePEc Author Service: Cristina Checherita Westphal

No 1380, Working Paper Series from European Central Bank

Abstract: This paper investigates empirically the effect of personal income tax progressivity on output volatility in a sample of OECD countries over the period 1982-2009. Our measure of tax progressivity is based on the difference between the marginal and the average income tax rate for the average production worker. We find supportive empirical evidence for the hypothesis that higher personal income tax progressivity leads to lower output volatility. All other factors constant, countries with more progressive personal income tax systems seem to benefit from stronger automatic stabilisers. JEL Classification: E63, E32, H10

Keywords: automatic stabilisers; output volatility; personal income taxes; Progressivity (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-acc, nep-eec, nep-pbe and nep-pub
Note: 1790315
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20111380

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