EconPapers    
Economics at your fingertips  
 

Payroll Taxes and the Labor Market: A Computable General Equilibrium Analysis

Gustavo Hernández

Latin American Journal of Economics-formerly Cuadernos de Economía, 2012, vol. 49, issue 1, 99-123

Abstract: This study uses a computable general equilibrium model to analyze the effects of eliminating Colombia’s parafiscal taxes, which finance social programs. In the model, these are substituted by alternative financing sources: VAT, indirect taxes or taxes on capital. The results show that elimination of parafiscal taxes produces a one percentage point decrease in the unemployment rate, as long as these are not substituted by other taxes. However, when other taxes are substituted for parafiscal taxes, there may not be any effect on the unemployment rate. This implies that eliminating parafiscal taxes does not produce the effects expected by a partial equilibrium analysis, that is, a significant reduction in the unemployment rate.

Keywords: Payroll taxes; applied general equilibrium; tax replacement (search for similar items in EconPapers)
JEL-codes: C68 H22 J31 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.economia.uc.cl/docs/491hera.pdf (application/pdf)

Related works:
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:ioe:cuadec:v:49:y:2012:i:1:p:99-123

Ordering information: This journal article can be ordered from

Access Statistics for this article

Latin American Journal of Economics-formerly Cuadernos de Economía is currently edited by Raimundo Soto

More articles in Latin American Journal of Economics-formerly Cuadernos de Economía from Instituto de Economía. Pontificia Universidad Católica de Chile. Contact information at EDIRC.
Bibliographic data for series maintained by Jaime Casassus ().

 
Page updated 2021-06-03
Handle: RePEc:ioe:cuadec:v:49:y:2012:i:1:p:99-123