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Using Payroll Tax Variation to Unpack the Black Box of Firm-Level Production.
- Source :
- Journal of the European Economic Association; Oct2021, Vol. 19 Issue 5, p2737-2764, 28p, 8 Charts, 9 Graphs
- Publication Year :
- 2021
-
Abstract
- This paper uses quasi-experimental variation in payroll tax rates in Finland to investigate how firms use their input factors. We find that higher payroll tax rates lead to large employment responses and have no effects on employee-level earnings. As payroll taxes increase, firms substitute away from low-skilled, routine, and manual workers. Higher firm-level payroll tax rates also slightly decrease the total output of firms. Our results imply that firm-level production and input factor choices are clearly affected by payroll taxes. [ABSTRACT FROM AUTHOR]
- Subjects :
- PAYROLLS
PAYROLL tax
BLUE collar workers
TAX rates
FACTORS of production
Subjects
Details
- Language :
- English
- ISSN :
- 15424766
- Volume :
- 19
- Issue :
- 5
- Database :
- Complementary Index
- Journal :
- Journal of the European Economic Association
- Publication Type :
- Academic Journal
- Accession number :
- 153100883
- Full Text :
- https://doi.org/10.1093/jeea/jvab010