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LABOR TAXATION AND INVESTMENT IN DEVELOPED COUNTRIES. THE IMPACT ON EMPLOYMENT

Michael Mitsopoulos () and Theodore Pelagidis ()
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Michael Mitsopoulos: Ph.D. Boston University. Director of Business Environment and Regulatory Affairs, SEV Hellenic Federation of Enterprises, Greece.

Regional Science Inquiry, 2021, vol. XIII, issue 2, 13-31

Abstract: One of the main topics highlighted in the field of economic policy applications is the impact of taxation on labor. In an era in which macroeconomic stability, technological change and globalization pressure the job market, there exists no strong consensus in the literature on how exactly taxation influences growth, choice between work and leisure, share of income attributed to labor or participation in different job market segments. Focusing on employment levels and using the results of the World Economic Forum (WEF) executive opinion survey (EOS) between 2013-2017 we bypass several challenges often faced in the literature. By doing so, we complement the insights of the existing literature by establishing that, in institutionally mature countries, taxation that is deemed by a survey of business executives to pose a disincentive to work, reduces employment. At the same time, such countries can also rely on the taxation of investment and the flexibility of wages to influence employment levels, unlike less competitive countries.

Keywords: Employment; Taxation of Labor; Non-wage Labor Costs; Executive Opinion Survey (search for similar items in EconPapers)
JEL-codes: H24 J21 J32 M52 (search for similar items in EconPapers)
Date: 2021
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