Aufsätze referiert extern - Web of Science
Laszlo Goerke, Markus Pannenberg
In: Labour Economics 16 (2009), 1, S. 107-118
Severance pay often results from a bargain between the firm and the employee to avoid or terminate a legal conflict. We theoretically investigate how income taxation affects these negotiations. Using panel data from West Germany and exploiting a change in tax law in 1999, we find that a higher income tax on severance pay reduces the probability of obtaining it and - in some specifications - also lowers its amount. Our results imply overshifting of the increase in the tax burden.