Who Bears the Burden of Social Security Contributions in Germany? Evidence from 35 Years of Administrative Data

17 Pages Posted: 15 Dec 2016

See all articles by Kai-Uwe Müller

Kai-Uwe Müller

German Institute for Economic Research (DIW Berlin)

Michael Neumann

German Institute for Economic Research (DIW Berlin)

Date Written: December 2016

Abstract

This paper provides evidence over a long time period on the question of who bears the burden of social security contributions (SSC) in Germany. Following Alvaredo et al. (2016) we exploit kinks in the budget set generated by a drop in the marginal SSC rate at earnings caps. Based on cross-sectional earnings distributions the framework does not rely on policy reforms. Applying the approach to administrative data for West Germany facilitates a comprehensive incidence analysis between 1975 and 2010. We find that neither employers nor employees shift a substantial part of their SSC burden. These results are consistent over the whole time period and in robustness checks corroborating previous findings. A small trend towards a slight increase in the SSC burden falling on employees is not statistically significant.

Keywords: Incidence, social security contributions, discontinuities

JEL Classification: H22, J38, H55

Suggested Citation

Müller, Kai-Uwe and Neumann, Michael, Who Bears the Burden of Social Security Contributions in Germany? Evidence from 35 Years of Administrative Data (December 2016). DIW Berlin Discussion Paper No. 1627. Available at SSRN: https://ssrn.com/abstract=2885759 or http://dx.doi.org/10.2139/ssrn.2885759

Kai-Uwe Müller (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Michael Neumann

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
14
Abstract Views
338
PlumX Metrics