Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279868 
Year of Publication: 
2020
Citation: 
[Journal:] German Economic Review [ISSN:] 1468-0475 [Volume:] 21 [Issue:] 2 [Publisher:] de Gruyter [Place:] Berlin [Year:] 2020 [Pages:] 217-233
Publisher: 
de Gruyter, Berlin
Abstract: 
Germany reintroduced parity funding of the statutory health insurance scheme in January 2019 by lowering the contribution rates for employees and raising those for employers, leaving the total rate constant. This reduces the tax wedge between total labour costs and net wages. After a small demand impulse on impact, followed by a small downturn in the first two years after implementation, an estimated New Keynesian DSGE model indicates small positive long-run output and employment effects. However, the reduced tax wedge leads to lower public revenues. Aggregate macroeconomic and welfare effects will depend on how the government compensates for these revenue losses.
Subjects: 
tax incidence
social security contributions
DSGE modeling
JEL: 
E32
E24
F41
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)

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