Please use this identifier to cite or link to this item:
https://hdl.handle.net/2440/98232
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Type: | Journal article |
Title: | Payroll taxes, social insurance and business cycles |
Author: | Burda, M. Weder, M. |
Citation: | Journal of the European Economic Association, 2016; 14(2):438-467 |
Publisher: | Wiley |
Issue Date: | 2016 |
ISSN: | 1542-4766 1542-4774 |
Statement of Responsibility: | Michael C. Burda and Mark Weder |
Abstract: | Payroll taxes represent a major distortionary influence of governments on labor markets. This paper examines the role of time-varying payroll taxes and the social safety net for cyclical fluctuations in a nonmonetary economy with labor market frictions and unemployment insurance, when the latter is only imperfectly related to search effort. A balanced social insurance budget induces countercyclical payroll taxation, renders gross wages more rigid over the cycle and strengthens the model's endogenous propagation mechanism. For conventional calibrations, the model generates a negatively sloped Beveridge curve and countercyclical unemployment as well as substantial volatility and persistence of vacancies and unemployment. |
Keywords: | Business cycles consumption-tightness puzzle labor markets payroll taxes unemployment |
Description: | Article first published online: 21 JUL 2015 |
Rights: | © 2015 by the European Economic Association |
DOI: | 10.1111/jeea.12145 |
Grant ID: | http://purl.org/au-research/grants/arc/DP1096358 http://purl.org/au-research/grants/arc/DP1096358 |
Published version: | http://dx.doi.org/10.1111/jeea.12145 |
Appears in Collections: | Aurora harvest 7 Economics publications |
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