EconPapers    
Economics at your fingertips  
 

Payroll Taxes, Social Insurance, and Business Cycles

Michael Burda () and Mark Weder ()

Journal of the European Economic Association, 2016, vol. 14, issue 2, 438-467

Abstract: Payroll taxes represent a major distortionary influence of governments on labor markets. This paper examines the role of time-varying payroll taxes and the social safety net for cyclical fluctuations in a nonmonetary economy with labor market frictions and unemployment insurance, when the latter is only imperfectly related to search effort. A balanced social insurance budget induces countercyclical payroll taxation, renders gross wages more rigid over the cycle and strengthens the model's endogenous propagation mechanism. For conventional calibrations, the model generates a negatively sloped Beveridge curve and countercyclical unemployment as well as substantial volatility and persistence of vacancies and unemployment.

JEL-codes: J64 E32 E24 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1111/jeea.12145 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Journal Article: PAYROLL TAXES, SOCIAL INSURANCE, AND BUSINESS CYCLES (2016) Downloads
Working Paper: Payroll Taxes, Social Insurance and Business Cycles (2010) Downloads
Working Paper: Payroll Taxes, Social Insurance and Business Cycles (2010) Downloads
Working Paper: Payroll Taxes, Social Insurance and Business Cycles (2010) Downloads
Working Paper: Payroll Taxes, Social Insurance and Business Cycles (2010) Downloads
Working Paper: Payroll Taxes, Social Insurance and Business Cycles (2010) Downloads
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:oup:jeurec:v:14:y:2016:i:2:p:438-467.

Access Statistics for this article

More articles in Journal of the European Economic Association from European Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2019-09-12
Handle: RePEc:oup:jeurec:v:14:y:2016:i:2:p:438-467.