Employment and Taxes

25 Pages Posted: 28 Jan 2004

See all articles by Stephen John Nickell

Stephen John Nickell

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Centre for Economic Policy Research (CEPR)

Date Written: December 2003

Abstract

This paper considers the impact of taxation policy on market work. On the basis of the evidence, we find that a 10 percentage point rise in the tax wedge will reduce overall labour input provided via the market by around 2 per cent of the population of working age. The tax wedge is the sum of the payroll, income and consumption tax rates. This only explains a minority of the market work differentials across countries. Much of the remainder is probably down to the differences in the social security systems supporting the unemployed, the sick and disabled and the early retired.

Keywords: employment, taxation, labour supply.

JEL Classification: H2, J2

Suggested Citation

Nickell, Stephen John, Employment and Taxes (December 2003). CESifo Working Paper Series No. 1109. Available at SSRN: https://ssrn.com/abstract=489443

Stephen John Nickell (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
England
+44 20 7955 7497 (Phone)
+44 20 7831 1840 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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