 Earnings Responses to Social Security ContributionsNo 1489, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Abstract: This paper exploits discontinuities induced by earnings caps for social security contributions (SSC) in Germany to analyse the effect of SSC on gross labour earnings. Empirical evidence is based on two complementary approaches utilising two administrative data sets. First, employment responses to SSC at the intensive margin are identified by a modified bunching approach that is applied to kinks in the budget set generated by the earnings caps. Second, I exploit an increase ofa regional earnings cap of health and long-term care insurance as a natural experiment. In order to analyse economic incidence a difference-in-differences approach is used to estimate the effects on gross earnings. I find employment responses to be negligible and the burden of SSC to be shared equally between employers and employees. Both results turn out to be robust and are consistent with a competitive labour market model. Keywords: Social security contributions; tax incidence; labour supply elasticities; labour demand elasticities; bunching (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp1489 Access Statistics for this paper More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.