Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282216 
Year of Publication: 
2022
Series/Report no.: 
KRTK-KTI Working Papers No. KRTK-KTI WP - 2022/23
Publisher: 
Hungarian Academy of Sciences, Institute of Economics, Centre for Economic and Regional Studies, Budapest
Abstract: 
We study the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, we examine the heterogeneous impact of the policy. Employment increases most at low-productivity firms offering low-wage jobs, which tend to hire from unemployment, while the effects are more muted for highproductivity firms offering high-wage jobs. At the same time, wages only increase at highproductivity firms. These results point to important heterogeneity in the incidence of payroll tax cuts across firms and highlight that payroll taxes have a significant impact on the composition of jobs in the labor market.
Subjects: 
payroll tax
tax incidence
firm heterogeneity
JEL: 
H24
H32
J23
J31
Document Type: 
Working Paper

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