Employment and growth effects of tax reforms in a growth-matching model

Angela Birk and Jochen Michaelis ()

No 208, HWWA Discussion Papers from Hamburg Institute of International Economics (HWWA)

Abstract: This paper explores how revenue-neutral tax reforms impact employment and economic growth in models of exogenous and endogenous growth and search frictions on the labor market. We show that (i) a cut in the payroll tax financed by an increase in the wage tax lowers both equilibrium employment and the equilibrium growth rate, that (ii) a higher energy tax combined with a cut in wage taxes boosts employment but has an ambiguous effect on growth, and that (iii) a higher energy tax combined with a cut in payroll taxes enhances employment but mitigates economic growth.

Keywords: search unemployment; growth; tax reform (search for similar items in EconPapers)
JEL-codes: E6 H2 J6 O4 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Employment and Growth Effects of Tax Reforms in a Growth-Matching Model (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwwadp:26324

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