Payroll Taxes and Firm Performance

30 Pages Posted: 25 Sep 2017 Last revised: 29 Apr 2018

See all articles by Niklas Kaunitz

Niklas Kaunitz

Stockholm University - Swedish Institute for Social Research (SOFI)

Johan Egebark

Research Institute of Industrial Economics (IFN)

Date Written: April 8, 2019

Abstract

The Swedish employer paid payroll tax was reduced substantially for young workers in 2007, causing firms’ average social fees to depend on the age structure of their employees. Using pre-reform conditions to define treated and control firms, we show that the lower costs induced by the reduced taxes have no impact on exit rates or profitability. We find negligible effects on gross investments, and negative, but not statistically significant, effects on labor productivity.

Keywords: Payroll Taxes, Labor Costs, Profitability, Labor Productivity, Investments

JEL Classification: D22, H22, J38, L25

Suggested Citation

Kaunitz, Niklas and Egebark, Johan, Payroll Taxes and Firm Performance (April 8, 2019). Available at SSRN: https://ssrn.com/abstract=3041225 or http://dx.doi.org/10.2139/ssrn.3041225

Niklas Kaunitz (Contact Author)

Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

Stockholm, 106 91
Sweden

Johan Egebark

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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