Does Tax-Benefit Linkage Matter for the Incidence of Social Security Contributions?

Antoine Bozio, Thomas Breda () and Julien Grenet

No 12502, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the earnings responses to three large increases in employer Social Security contributions (SSCs) in France. We find evidence of full pass-through to workers in the case of a strong and salient relationship between contributions and expected benefits. By contrast, we find limited pass-through of employer SSCs to wages for reforms that increased SSCs with no tax-benefit linkage. Together with a meta-analysis of the literature, we interpret these results as evidence that tax-benefit linkage and its salience matter for incidence, a claim long made by the literature but not backed by direct empirical evidence to date.

Keywords: tax incidence; payroll tax; social security contributions; tax-benefit linkage (search for similar items in EconPapers)
JEL-codes: H22 H55 (search for similar items in EconPapers)
Pages: 88 pages
Date: 2019-07
New Economics Papers: this item is included in nep-age, nep-eur, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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