Social Security Contributions Distribution and Economic Activity
Jose Torres ()
No 2020-01, Working Papers from Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center
This paper studies the macroeconomic implications of the distribution of the social security tax between employees and employers using a general equilibrium framework. We calibrate a Dynamic General Equilibrium model for the average of OECD countries and find that increasing the share of social security contributions paid by employers has a positive effect on economic activity. Whereas raising the employer?s share increases the labor cost for ?firms and reduces the equilibrium gross wage, conversely, workers? net labor income increases, increasing employment and output. The response of the economy to the change in the distribution of social security contributions between employees and employers depends on how the total labor tax wedge changes, which is also affected by the labor income tax and the consumption tax, as distortionary effects from one tax are not independent from the other taxes driving wages? purchasing power.
Keywords: Social Security Contributions; Employees Contributions; Employers Contributions; Dynamic General Equilibrium models (search for similar items in EconPapers)
JEL-codes: E20 H20 H22 H55 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://theeconomics.uma.es/malagawpseries/Papers/METCwp2020-1.pdf First version, 2020 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:mal:wpaper:2020-1
Access Statistics for this paper
More papers in Working Papers from Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center Contact information at EDIRC.
Bibliographic data for series maintained by Ascension Andina ().