Skip to Main Navigation

The effect of the Swedish payroll tax cut for youths on firm profitability (English)

Payroll taxes in Sweden were reduced substantially for people ages 26 years or younger on July 1, 2007. The objective of this tax cut was to lower youth unemployment. The question of how gains from payroll taxes are distributed between workers and owners of firms has been the focus of considerable theoretical and empirical attention. This paper examines the impact of the Swedish reform on firm profits using individual-level and firm-level microdata. Previous investigations into the effects of this particular reform have focused entirely on the effects on employment and wages, or have been limited to the retail sector. This paper finds that the reform was not associated with a general increase in firm profitability, but that there is some evidence of a positive effect on profits in the retail and wholesale sector.

Details

  • Author

    Malm,Arvid, Eklund,Johan, Francis,David C., Jiang,Nan

  • Document Date

    2016/10/11

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS7854

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Sweden,

  • Region

    Europe and Central Asia,

  • Disclosure Date

    2016/10/11

  • Disclosure Status

    Disclosed

  • Doc Name

    The effect of the Swedish payroll tax cut for youths on firm profitability

  • Keywords

    efficiency wage model;firm profitability;elasticity of labor demand;elasticity of labor supply;payroll tax;youth;fixed effect;payroll tax cuts;payroll tax reduction;payroll tax subsidy;fixed effect model;random effects model;demand for labor;Young Workers;firm size;high youth unemployment;payroll tax rate;measure of profitability;age of eligibility;reducing payroll taxes;average educational level;cost of labor;effect on employment;random effects estimates;minimum wage employment;tax on wage;partial equilibrium model;panel data set;unemployment insurance program;place of work;average education level;source of revenue;public sector institution;effects of tax;availability of data;employment effect;model specification;profit increase;youth employment;Retail Sector;Labor Market;wage effect;effect approach;data quality;low-wage worker;significant correlation;young people;market condition;corporate tax;labour economics;statistical relationship;government budget;test statistic;data availability;profitability measure;accounting information;profitability effect;classification system;tax revenue;tax policy;older worker;retail firms;sickness insurance;Work Injury;survivor's pension;specific taxes;monetary term;lag effect;increased competition;goods market;market power;government mandate;Hiring Credits;regional employment;regional science;international tax;0 hypothesis;labor economics;urban economics;high profitability;sectoral outcomes;public finance;account data;behavioral effect;human capital;sectoral classification;imperfect competition;cross-sectional evidence;relevant population;average wage;wage increase;annual wage;crowding out;Job Creation;high wage;unemployed worker;knowledge gap;substitution effect;firm owner;institutional environment;severe recession;political issue;budgetary impact;research literature;employment opportunities;employment opportunity;input cost;maternity benefit;open access;development policy;informational asymmetry;job market;bargaining power;trade union;business cycle;linear model;business statistic;employee ownership;subsequent phase;wage income;firm location;firm skill;regression approach;average share;sector employees;model result;

Downloads

COMPLETE REPORT

Official version of document (may contain signatures, etc)

  • Official PDF
  • TXT*
  • Total Downloads** :
  • Download Stats
  • *The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity.

Citation

Malm,Arvid Eklund,Johan Francis,David C. Jiang,Nan

The effect of the Swedish payroll tax cut for youths on firm profitability (English). Policy Research working paper,no. WPS 7854 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/803371476191665204/The-effect-of-the-Swedish-payroll-tax-cut-for-youths-on-firm-profitability