Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95625
Authors: 
Egebark, Johan
Kaunitz, Niklas
Year of Publication: 
2014
Series/Report no.: 
IFN Working Paper 1001
Abstract: 
In 2007, the Swedish employer-paid payroll tax was cut on a large scale for young workers, substantially reducing labor costs for this group. Using Difference-in- Differences paired with exact matching, we estimate a small impact, both on employment and on wages, implying a labor demand elasticity for young workers at around 􀀀0:31. Since the tax reduction applied also to existing employments, the cost of the reform was sizable, and the estimated cost per created job is at more than four times that of directly hiring workers at the average wage. Hence, we conclude that payroll tax cuts are an ineffcient way to boost employment for young individuals.
Subjects: 
Youth unemployment
Payroll tax
Tax subsidy
Labor costs
Exact matching
JEL: 
H25
H32
J23
J38
J68
Document Type: 
Working Paper

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