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November 20, 2013

Cluster-Seminar Public Finances and Living Conditions

Employment and Wage Impacts of Social Security Contributions

Date

November 20, 2013
12:30 - 13:30

Location

Eleanor-Dulles-Raum
DIW Berlin im Quartier 110
Room 5.2.010
Mohrenstraße 58
10117 Berlin

Speakers

Luke Haywood
We present work in progress on evaluating the employment and wage effects of social security contributions (SSC). We propose to use an equilibrium job search model allowing for extensive and intensive employment reactions, with firms also changing wages. The model naturally generates adjustment dynamics. Using firm-level data on productivity will allow us to identify to what extent productive workers and productive firms sort positively - an estimate for which we believe tax policy must be taken into account. We include detailed information on corporate taxation. The direction and degree of sorting will also determine the distributional impacts of SSC policies across different individuals. We propose to use long-running matched employer-employee data from France and Germany to consider the impacts of large changes in SSC on employment and wages.

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