2009
DOI: 10.1086/592839
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Labor Market Effects of Payroll Taxes in Developing Countries: Evidence from Colombia

Abstract: We use a panel of manufacturing plants from Colombia to analyze how the rise in payroll tax rates over the 1980s and 1990s affected the labor market. Our estimates indicate that formal wages fall by between 1.4% and 2.3% as a result of a 10% rise in payroll taxes. This "less-than-full shifting" is likely to be the result of weak linkages between benefits and taxes and the presence of downward wage rigidities in Colombia. Because the costs of taxation are only partly shifted from employers to employees, employm… Show more

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Cited by 190 publications
(176 citation statements)
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“…Another strand of the literature estimates the effects of payroll-tax reforms (e.g. Gruber (1997), Kugler and Kugler (2009), Liebman and Saez (2006), and Saez, Matsaganis and Tsakloglu (2012b) among others). that the elasticity is presumably much higher for top income earners (e.g., Gruber and Saez (2002)).…”
Section: Introductionmentioning
confidence: 99%
“…Another strand of the literature estimates the effects of payroll-tax reforms (e.g. Gruber (1997), Kugler and Kugler (2009), Liebman and Saez (2006), and Saez, Matsaganis and Tsakloglu (2012b) among others). that the elasticity is presumably much higher for top income earners (e.g., Gruber and Saez (2002)).…”
Section: Introductionmentioning
confidence: 99%
“…The labour cost increases may force firms' to cut the labour hours, or to change from full time to part time, which negatively affects employees' wages [4] [11]. In developing countries, such as Colombia, increases in labour costs by 13% significantly associated with a reduction of employment rate by 6% [12]. Other firms may adjust to the increase of the labour cost by replacing low-skilled employees with highskilled employees [13].…”
Section: The Impact Of Minimum Wage Policymentioning
confidence: 99%
“…A literatura que trata dos efeitos do imposto sobre a folha relativamente ao emprego, desemprego e salários é ambígua. Há desde trabalhos indicando que mudanças no imposto são totalmente ajustadas via salários, até artigos que mostram que há efeitos substanciais sobre o nível e a composição do emprego (kUGlEr;kUGlEr, 2003). no caso brasileiro, no primeiro grupo há o trabalho de Fernandes et al.…”
Section: Imposto Sobre a Folhaunclassified