Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/63741
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dc.contributor.authorPiekkola, Hannuen_US
dc.date.accessioned2012-09-21T10:58:57Z-
dc.date.available2012-09-21T10:58:57Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/63741-
dc.description.abstractWe analyse taxes and employment in a system of firm-level labour demand and industry-level regional labour supply, using linked employer-employee data from Finland in 1990-2003. We show that virtually all of the wage tax burden is borne by employers since wages fully adjust. Labour demand also responds with short lags within a year or two to cuts in taxes and labour costs. A unit decrease in wage tax rate (2.2% lower taxes) leads to an average long-run employment improvement of 0.8%, while an equivalent cut in social security payments has effects that are nearly twice as low. Tax cuts thus explain a substantial part of the recent improvement in employment since the deep recession of the early 1990s (besides the release of firms’ liquidity constraints). Nearly half of the tax revenue loss due to wage tax cuts is paid back in the form of higher employment and lower unemployment costs. Tax cuts with emphasis on low-wage, low-productivity firms may appear undesirable, as tax cuts cure employment of lowskilled workers especially in skill-intensive firms.en_US
dc.language.isoengen_US
dc.publisher|aThe Research Institute of the Finnish Economy (ETLA) |cHelsinkien_US
dc.relation.ispartofseries|aETLA Discussion Papers, The Research Institute of the Finnish Economy (ETLA) |x1041en_US
dc.subject.jelJ31en_US
dc.subject.jelJ59en_US
dc.subject.jelC24en_US
dc.subject.ddc330en_US
dc.subject.keywordTaxation on Labour, Labour Demand, Regional labour supply, Wage Bargaining, Wage Elasticityen_US
dc.subject.stwSteuerbelastungen_US
dc.subject.stwArbeitsnachfrageen_US
dc.subject.stwBeschäftigungseffekten_US
dc.subject.stwLohnen_US
dc.subject.stwElastizitäten_US
dc.subject.stwLohnstrukturen_US
dc.subject.stwFinnlanden_US
dc.titleTax cuts and employment: Evidence from Finnish linked employer-employee dataen_US
dc.typeWorking Paperen_US
dc.identifier.ppn519464826en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US

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