Working Paper No. 46

Effects of Changes in Payroll Taxes – Theory and U.S./Swedish Experiences


This paper includes theoretical and empirical analyses of some effects of changes in payroll taxes. First, the implication of the standard partial equilibrium analysis is explored in Section II. In particular, the relationship between statutory and economic incidence are clarified and the textbook neutrality conventionally taken for granted is shown to be subject to strong qualifications. It is demonstrated that the wage and employment effects of a one percentage point increase in the employers contribution generally will differ from the effects of an increase by one percentage point of the employees ' tax rate. Given the institutional features of the U.S. income and payroll tax systems, the theoretical results imply that a given increase in the employees' payroll tax rate will induce greater employment reductions (and greater increases in wage costs) than an increase in the employers part of the tax. This non-neutrality, however, does not prevail when the incidence of incremental payroll tax changes is analyzed; labor's net income loss per tax dollar is exactly the same in the two policy alternatives.

An Agenda for Europe

Institutional Reform for Innovation and Entrepreneurship

Omslag 2017 Institutional Reform for Innovation and Entrepreneurship.jpg

The authors of this book, Niklas Elert, Magnus Henrekson and Mikael Stenkula, advise the economies of the European Union to become more entrepreneurial in promoting innovation and economic growth. The authors propose a reform strategy with respect to several aspects to achieve this goal.

Events

Seminars organized by IFN

 

To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se