Tax Policy and Employment: How Does the Swedish System Fare?

Jukka Pirttilä and Håkan Selin

No 3355, CESifo Working Paper Series from CESifo

Abstract: This paper reviews the literature on optimal taxation of labour income and the empirical work on labour supply and the elasticity of taxable income in Sweden. It also presents an overview of Swedish taxation of labour income, offers calculations on the development in effective marginal tax rates and participation tax rates, and estimates, using the difference-in-differences method, the impact of tax incentives on employment rates of elderly workers. After this background, we ponder possibilities for reforming the Swedish tax system to improve its labour market impacts. We suggest better targeting the earned income tax credit at families and low-income workers, lowering the top marginal tax rates, and maintaining the tax incentives for older workers.

Keywords: optimal taxation; labour income taxation; labour supply; taxable income; Swedish tax system (search for similar items in EconPapers)
JEL-codes: H21 H24 J22 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Working Paper: Tax Policy and Employment: How Does the Swedish System Fare? (2011)
Working Paper: Tax Policy and Employment: How Does the Swedish System Fare (2011)
Working Paper: Tax Policy and Employment: How Does the Swedish System Fare? (2011)
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