Payroll Tax, Employment and Labor Market Concentration

Erick Baumgartner () and Renata Narita Raphael Corbi

No 2022_06, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: How much employment can be generated by decreasing payroll taxes? We examine this question by exploring the staggered rollout of a large payroll tax reform in Brazil. Using administrative matched employer-employee data, we find an increase of 5 percent on employment due to both firm growth and firm entry, no impact on wages and an increase of 59 percent in profits. Moreover, employment effects are driven by less concentrated labor markets, consistent with predictions from an oligopsony model.

Keywords: Payroll Tax; Employment; Wages; Profits; Oligopsony (search for similar items in EconPapers)
JEL-codes: H25 H32 J31 J42 J6 (search for similar items in EconPapers)
Date: 2022-03-24
New Economics Papers: this item is included in nep-com, nep-pbe, nep-pub and nep-ure
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Citations: View citations in EconPapers (2)

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