Labour Taxation and Its Impact on Employment Growth

Primoz Dolenc and Suzana Laporšek
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Primoz Dolenc: University of Primorska, Slovenia

Managing Global Transitions, 2012, vol. 10, issue 3 (Fall), 301-318

Abstract: The paper aims to assess the characteristics of labour taxation for five different groups of workers and labour market performance (in terms of employment and unemployment rate) in the EU and to examine whether tax wedge affects employment growth in the EU. The descriptive empirical estimates show that the level of labour taxation varies greatly across EU Member States, by which the tax wedge tends to be higher among NewMember States (excluding Cyprus andMalta). Furthermore, the panel regression analyses confirm statistically significant negative relationship between tax wedge and employment growth in the EU as a whole. Therefore, the empirical analysis suggests that the EU-27 should continue with the trend of reducing tax wedge, as this would have favourable effects on labour market performance, especially among New Member States.

Keywords: labour taxation; employment growth; labour market; economic policy; European Union (search for similar items in EconPapers)
JEL-codes: J30 J38 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (1)

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