Labour market responses to taxes: a structural approach


Motivation: Fiscal policy has been used for more than twenty years in France with the objective to foster employment of low-wage workers. Meanwhile, the average tax burden for workers and employers in Germany has recently been lowered. Comparing changes in labour market performance in these two countries over time will help to better understand the real effects of fiscal policy on the labor market.

Project: This project gathers two teams of researchers to study jointly the impact of labor market taxes (income tax, corporate tax, and social security contributions), on wages, working hours, and employment. The analysis is conducted using job search models typically used by labor economist to model unemployment and workers’ employment trajectories. The effect of labor taxes is assessed thanks to those models estimated on large administrative panel datasets in France and Germany.

logo-anr-ipp2Funding: The Agence nationale de la recherche (ANR) finance the French team within the framework of the international call Open Research Area (ORA).

IPP researchers associated to this project: Thomas Breda, François Fontaine and Haomin Wang.

diw_berlin_logoScientific Partners: Deutsches Institut für Wirtschaftsforschung (DIW-Berlin) is a research centre dedicated to analysis of economic policies in Germany; the German team comprises Peter Haan and Luke Haywood.

IPP tools: Barèmes IPP

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