Publication: Firm Heterogeneity and the Impact of Payroll Taxes
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Published
2022-12
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Date
2023-01-09
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Abstract
This paper studies the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, the paper examines 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.
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“Bíró, Anikó; Branyiczki, Réka; Lindner, Attila; Márk, Lili; Prinz, Dániel. 2022. Firm Heterogeneity and the Impact of Payroll Taxes. Policy Research Working Papers;10265. © World Bank. http://hdl.handle.net/10986/38396 License: CC BY 3.0 IGO.”
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