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IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA) >
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http://hdl.handle.net/10419/20891
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| Title: | | Value-added Tax versus Social Security Contributions  |
| Authors: | | Goerke, Laszlo |
| Issue Date: | | 1999 |
| Series/Report no.: | | IZA Discussion paper series 55 |
| Abstract: | | In order to alleviate unemployment it is often recommended to reduce social security contributions (SSC) and to compensate for the ensuing loss in revenues by a rise in the value-added tax (VAT). Assuming unemployment to be caused by efficiency wages, it is shown that a balanced-budget shift from a payroll tax to a VAT will increase employment if the rise in the VAT does not alter consumer prices. If the effects of a shift from SSC to the VAT on the worker's effort are neutralised, for example, by imposing a constant wedge, the employment impact will depend on the nature of the unemployment compensation system. |
| Subjects: | | Efficiency wages social security contributions unemployment value-added tax |
| JEL: | | H25 J41 J32 H24 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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