Employment effects of a payroll-tax cut - evidence from a regional tax exemption experiment

Ossi Korkeamäki and Roope Uusitalo

No 2006:10, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: 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.

Keywords: Payroll-tax; Labour demand; Tax incidence; Propensity score matching (search for similar items in EconPapers)
JEL-codes: J18 J23 J38 J58 J65 J68 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-10-10
New Economics Papers: this item is included in nep-geo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf [301 Moved Permanently]--> https://www.ifau.se/upload/pdf/se/2006/wp06-10.pdf)

Related works:
Working Paper: Employment Effects of a Payroll-Tax Cut: Evidence from a Regional Tax Exemption Experiment (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2006_010

Access Statistics for this paper

More papers in Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy IFAU, P O Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ali Ghooloo ( this e-mail address is bad, please contact ).