Earnings responses to social security contributions

Michael Neumann

Labour Economics, 2017, vol. 49, issue C, 55-73

Abstract: This paper utilises the discontinuities induced by earnings caps for social security contributions (SSC) in Germany to analyse the effect of SSC on gross labour earnings. Economic incidence is identified by exploiting an increase of a regional earnings cap of health and long-term care insurance as a natural experiment. Based on administrative data, difference-in-differences models are estimated. I find the burden of SSC is shared equally between employers and employees. An auxiliary analysis studies employment responses to SSC at the intensive margin by a modified bunching approach that is applied to the earnings caps of health and long-term care insurance. Finding employment responses to be negligible supports crucial identifying assumptions of the main analysis. Both results are robust and consistent with a standard partial-equilibrium labour market model.

Keywords: Social security contributions; Tax incidence; Labour supply elasticities; Labour demand elasticities; Bunching (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927537117303081
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Earnings Responses to Social Security Contributions (2015)
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:eee:labeco:v:49:y:2017:i:c:p:55-73

DOI: 10.1016/j.labeco.2017.10.001

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().