Tax Wedge in Labour Market

Authors

ZIMČÍK Petr

Year of publication 2019
Type Article in Proceedings
Conference Proceedings of the International Scientific Conference ECONOMIC AND SOCIAL POLICY: Economic and Social Challenges for European Economy
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web http://www.narodacek.cz/wp-content/uploads/2019/12/Proceedings-of-the-International-Scientific-Conference_2019-595-605.pdf
Keywords Employment; Labour Market; Taxation; Tax Wedge
Description Labour and mostly wages are subject to taxes as any other economic activity, but labour taxes are primary source of government funding in developed economies. This research paper has aim to examine possible effects of taxation in labour market on employment and unemployment rate using tax wedge indicator. Overall tax burden is not the only concern, because focus is also set on tax progressivity. Dataset which contain 25 OECD member states over 17 years is used for econometric estimation using two-step GMM method. The main result is that higher taxation of labour is associated with lower employment rate while simultaneously related to higher unemployment rate.
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