Payroll tax reductions for the low paid

Jean-Paul Fitoussi

Post-Print from HAL

Abstract: A review of different theoretical models confirms that economists of opposing beliefs find themselves agreeing about the usefulness of employment subsidies. In a country with a relatively high wage floor, they reduce the cost of labour for firms. In countries where wage floors are low, subsidies can increase the net real wage of workers. In both cases, employment is likely to rise. Generally, allowing the price system to perform its allocative function while pursuing distributive objectives through the tax system is welfare enhancing. It is therefore surprising that such a remedy has not yet been implemented on a large scale in all countries suffering from labour market problems. One reason is that there may be a problem of transition. Empirical evidence suggests that reductions in taxes on labour will not solve employment and distribution problems, but will, in the long run, promise progress in both.

Date: 2000
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-00972903
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in OECD Economic Studies, 2000, 2000-2 (31), pp.115-131

Downloads: (external link)
https://sciencespo.hal.science/hal-00972903/document (application/pdf)

Related works:
Working Paper: Payroll tax reductions for the low paid (2000)
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:hal:journl:hal-00972903

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().