The Response of Labour Taxation to Changes in Government Debt

Holm-Hadulla, Federic; Leiner-Killinger, Nadine; Slavik, Michal

doi:10.2139/ssrn.1768746

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The Response of Labour Taxation to Changes in Government Debt

ECB Working Paper No. 1307

25 Pages Posted: 7 Mar 2011

See all articles by Federic Holm-Hadulla

Michal Slavik

European Central Bank (ECB) - Directorate General Economics

Date Written: February 24, 2011

Abstract

This paper investigates the relationship between government debt and labour taxation for a panel of 18 EU countries over the period 1979-2008. The econometric estimates point to a statistically significant and economically relevant positive response of labour taxation to changes in the general government debt and interest expenditure-to-GDP ratios. The results are robust across a range of econometric specifications and labour tax indicators.

Keywords: Debt, labour taxes, fiscal adjustment

JEL Classification: H2, H24, H63, J22

Suggested Citation: Suggested Citation

Holm-Hadulla, Federic and Leiner-Killinger, Nadine and Slavik, Michal, The Response of Labour Taxation to Changes in Government Debt (February 24, 2011). ECB Working Paper No. 1307, Available at SSRN: https://ssrn.com/abstract=1768746 or http://dx.doi.org/10.2139/ssrn.1768746