Firm Heterogeneity and the Impact of Payroll Taxes
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World Bank, Washington, DC
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This paper studies the impact of a
large payroll tax cut for older workers in Hungary.
Motivated by the predictions of a standard equilibrium job
search model, the paper examines the heterogeneous impact of
the policy. Employment increases most at low-productivity
firms offering low-wage jobs, which tend to hire from
unemployment, while the effects are more muted for
high-productivity firms offering high-wage jobs. At the same
time, wages only increase at high-productivity firms. These
results point to important heterogeneity in the incidence of
payroll tax cuts across firms and highlight that payroll
taxes have a significant impact on the composition of jobs
in the labor market.
Palabras clave
PAYROLL TAX, TAX INCIDENCE, FIRM HETROGENEITY, LABOR MARKET, OLDER WORKERS, UNEMPLOYMENT, EMPLOYMENT OF OLDER WORKERS