Firm Heterogeneity and the Impact of Payroll Taxes

Anikó Bíró, Réka Branyiczki (), Attila Lindner (), Lili Márk and Daniel Prinz ()
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Réka Branyiczki: CEU, TÁRKI
Attila Lindner: UCL

No 2223, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: We study the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, we examine the heterogeneous impact of the policy. Employment increases most at low-productivity firms offering low-wage jobs, which tend to hire from unemployment, while the effects are more muted for high-productivity firms offering high-wage jobs. At the same time, wages only increase at high-productivity firms. These results point to important heterogeneity in the incidence of payroll tax cuts across firms and highlight that payroll taxes have a significant impact on the composition of jobs in the labor market.

Keywords: payroll tax; tax incidence; firm heterogeneity (search for similar items in EconPapers)
JEL-codes: H24 H32 J23 J31 (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-bec, nep-dge, nep-mfd, nep-pbe and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Firm heterogeneity and the impact of payroll taxes (2022)
Working Paper: Firm Heterogeneity and the Impact of Payroll Taxes (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:has:discpr:2223

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