Job search under changing labour taxes

Alex Bryson and Harald Dale-Olsen

Labour Economics, 2025, vol. 95, issue C

Abstract: Workers’ job mobility decisions are related to firms’ wage policies but also depend on tax schedules. Using Norwegian population-wide administrative linked employer-employee data for 2010–2019, we study how the job-to-job turnover of employees is affected by marginal taxes and firms’ pay policies, thus drawing inferences on job search behaviour. By paying higher wages, job-to-job separation rates drop, but this negative relationship is weakened when income taxes increase, consistent with higher taxes reducing search activity. However, consistent with theory, the tax effect is smaller where workers receive performance bonuses.

Keywords: Job search; Marginal taxes; Monopsony; Wages; Effort (search for similar items in EconPapers)
JEL-codes: H24 J42 J63 M12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:95:y:2025:i:c:s0927537125000740

DOI: 10.1016/j.labeco.2025.102750

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