Effects of a reduction in employers' social security contributions: Evidence from Spain

Pilar Campoy-Muñoz (), Manuel Alejandro Cardenete (), M. Carmen Delgado and Geoffrey Hewings

No 2016-32, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Programs to reduce employers' social security contributions are being widely discussed in both the political arena and academic forums as tools for promoting economic growth and boosting employment. This paper employs a computable general equilibrium model to assess the economic impact on the national economy of the proposals from the Spanish Confederation of Enterprise Organizations about reducing the social security contributions paid by employers. The results show that the proposals fail to reduce unemployment when they are combined with compensation by revenues from indirect taxes; whereas compensation through increased personal income taxes shows positive results on unemployment in exchange for decreases in private consumption.

Keywords: computable general equilibrium models; social security contributions; tax reforms; fiscal consolidation (search for similar items in EconPapers)
JEL-codes: C68 H20 H32 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cmp and nep-ger
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https://www.econstor.eu/bitstream/10419/142684/1/862578396.pdf (application/pdf)

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Working Paper: Effects of a reduction in employers’ Social Security contributions: Evidence from Spain (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201632

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