Payroll Taxes, Wages and Employment: Identification through Policy Changes
Sebastian Galiani and
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Susana Kidyba: Instituto Nacional de Estadística y Censos (INDEC) - Argentina
CEDLAS, Working Papers from CEDLAS, Universidad Nacional de La Plata
This paper investigates the effect of changes in payroll taxes on wages and employment in Argentina. The analysis, based on administrative data, focuses on the impact of a series of major changes in payroll taxes which varied across geographical areas. This setup offers two main advantages over previous studies. First, using longitudinal data, the variation in tax rates across space and time provides a plausible source of identification of their effects on employment and wages. Second, the use of legal tax rates for each area at each point in time provides a remedy for the measurement error bias raised by the use of empirical rates constructed from observed tax and wage bills. Once this bias is accounted for, the results indicate that changes in payroll tax rates are only partially shifted onto wages, and they point to the absence of any significant effect on employment.
Keywords: Argentina; payroll taxes; employment; wages (search for similar items in EconPapers)
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Journal Article: Payroll taxes, wages and employment: Identification through policy changes (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:dls:wpaper:0093
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