Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden

Emmanuel Saez, Benjamin Schoefer and David Seim

American Economic Review, 2019, vol. 109, issue 5, 1717-63

Abstract: This paper uses administrative data to analyze a large employer-borne payroll tax rate cut for young workers in Sweden. We find no effect on net-of-tax wages of young treated workers relative to slightly older untreated workers, and a 2–3 percentage point increase in youth employment. Firms employing many young workers receive a larger tax windfall and expand right after the reform: employment, capital, sales, and profits increase. These effects appear stronger in credit-constrained firms. Youth-intensive firms also increase the wages of all their workers collectively, young as well as old, consistent with rent sharing of the tax windfall.

JEL-codes: H25 H32 J13 J23 J31 M51 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20171937
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Citations: View citations in EconPapers (162)

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Working Paper: Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden (2017)
Working Paper: Payroll Taxes, Firm Behavior, and Rent Sharing: Evidence from a Young Workers' Tax Cut in Sweden (2017)
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