Abstract

http://ssrn.com/abstract=1926644
 


 



The Finnish Payroll Tax Cut Experiment Revisited


Ossi Korkeamäki


Government Institute for Economic Research (VATT)

April 13, 2011

Government Institute for Economic Research Working Papers No. 22

Abstract:     
In this paper I evaluate the effects of a regional experiment that reduced payroll taxes by 3–6 percentage points of the firms’ wage sum in northern and eastern Finland. I estimate the effect of the payroll tax reduction on firms’ employment levels, wage sum and profits, and on workers’ hourly pay and monthly hours worked, by comparing the changes in employment and wages before and after the start of the experiment to a control region. My results indicate that the reduction in payroll taxes did not lead to any unequivocal aggregate effects in the target region.

Number of Pages in PDF File: 44

Keywords: payroll-tax, labour demand, tax incidence

JEL Classification: J18, J23, J38, J58, J65, J68

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Date posted: September 14, 2011  

Suggested Citation

Korkeamäki, Ossi, The Finnish Payroll Tax Cut Experiment Revisited (April 13, 2011). Government Institute for Economic Research Working Papers No. 22. Available at SSRN: http://ssrn.com/abstract=1926644 or http://dx.doi.org/10.2139/ssrn.1926644

Contact Information

Ossi Korkeamäki (Contact Author)
Government Institute for Economic Research (VATT) ( email )
Arkadiankatu 7
Helsinki, 00101
Finland
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