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Title:The Wedge PDF Logo
Authors:Goerke, Laszlo
Issue Date:1999
Series/Report no.:IZA Discussion paper series 71
Abstract:It is often argued that the quantity which is traded on the market is independent of the side of the market which is taxed. However, this assertion need not hold, especially in imperfectly competitive markets like that for labour. Taking an efficiency wage economy as an example, it is shown that the legal incidence of social security contributions will affect the economic incidence if unemployment compensation is subject to social security contributions. Since this is the case in numerous OECD countries, the wedge between producer costs and the net wage might be an inappropriate device for measuring the impact of social security contributions on wages and employment.
Subjects:Efficiency wages
social security contributions
tax incidence
unemployment benefits
JEL:H22
J41
H55
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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