Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284219 
Year of Publication: 
2022
Series/Report no.: 
IFS Working Papers No. 22/49
Publisher: 
Institute for Fiscal Studies (IFS), London
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 high-productivity firms offering high-wage jobs. At the same time, wages only increase at high-productivity 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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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