Project without external funding

Employment and Growth effects of Tax Reforms in a Growth-Matching Model


Project Details
Project duration: 01/200211/2002


Abstract
This paper explores how revenue-neutral tax reforms impact employment and economic growth in models of exogenous and endogenous growth and search frictions on the labor market. We show that (i) a cut in the payroll tax financed by an inrease in the wage tax lowers both equilibrium employment and the equlibrium growth rate, that (ii) a higher energy tax combined with a cut in wage taxes boosts employment but has an ambiguous effect on growth, and that (iii) a higher energy tax combined with a cut in payroll taxes enhances employment but mitigates economic growth.

Last updated on 2017-11-07 at 14:35