Labor Taxation in the Western Balkan: Looking Back and Forward

Alain Jousten, Mario Mansour, Irena Jankulov Suljagic and Charles Vellutini

No 2022/239, IMF Working Papers from International Monetary Fund

Abstract: This paper examines how labor taxation (personal income taxes and social security contributions) in the Western Balkan contributes to labor market outcomes such as high informality and a significant gender gap in participation rates. We find that limited progressivity combined with high tax wedge on low incomes poses a major twin equity-efficiency challenge in the region, resulting in low redistributive capacity and inadequate incentives to enter the job market. Policy implications are discussed with a view to alleviating the excessively high tax wedges on low incomes, while improving progressivity of income taxation.

Keywords: Western Balkan; labor taxation; labor tax wedge; personal income tax; corporate income tax; social security contributions; income taxation; SSC reduction; employer SSCs; Labor taxes; Tax wedge; Wages; Labor markets; Europe (search for similar items in EconPapers)
Pages: 33
Date: 2022-12-02
New Economics Papers: this item is included in nep-acc, nep-lab, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2022/239

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