Holm-Hadulla, Fédéric Leiner-Killinger, Nadine Slavík, Michal
Year of Publication:
ECB Working Paper No. 1307
This paper investigates the relationship between government debt and labour taxation for a panel of 18 EU countries over the period 1979-2008. The econometric estimates point to a statistically significant and economically relevant positive response of labour taxation to changes in the general government debt and interest expenditure-to-GDP ratios. The results are robust across a range of econometric specifications and labour tax indicators.