34 research outputs found
Fiscal sustainability and demographic change: a micro-approach for 27 EU countries
The effect of demographic change on the labor force and on fiscal revenues is topical in light of potential pension shortfalls. This paper evaluates the effect of demographic changes between 2010 and 2030 on labor force participation and government budgets in the EU-27. Our analysis involves the incorporation of population projections, and an explicit modeling of the supply and demand side of the labor market. Our approach overcomes key shortcomings of most existing studies that focus only on labor supply when assessing the effects of policy reforms. Ignoring wage reactions greatly understates the increase in fiscal revenues, suggesting that fiscal strain from demographic change might be less severe than currently perceived. Beyond, ou r micro-based approach captures the impact on fiscal revenues more accurately than previous studies. Finally, as a policy response to demographic change and worsening fiscal budgets, we simulate the increase in the statutory retirement age. Our policy simulations confirm that raising the statutory retirement age can balance fiscal budgets in the long run
Do higher corporate taxes reduce wages? : Micro evidence from Germany
Because of endogeneity problems very few studies have been able to identify
the incidence of corporate taxes on wages. We circumvent these problems
by using an 11-year panel of data on 11,441 German municipalities' tax
rates, 8 percent of which change each year, linked to administrative matched
employer-employee data. Consistent with our theoretical model, we find a
negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities
yields a 77 cent decrease in the wage bill. The direct wage effect, arising
in a collective bargaining context, dominates, while the conventional indirect
wage effect through reduced investment is empirically small due to regional labor
mobility. High and medium-skilled workers, who arguably extract higher
rents in collective agreements, bear a larger share of the corporate tax burden
Exporting and labor demand : micro-level evidence from Germany
It is widely believed that globalization affcts the extent of employment and
wage responses to economic shocks. To provide evidence for this, we analyze
the effect of firms' exporting behavior on the elasticity of labor demand. Using
rich, German administrative linked employer-employee panel data from 1996
to 2008, we explicitly control for self-selection into exporting and endogeneity
concerns. In line with our theoretical model, we find that exporting at both
the intensive and extensive margins significantly increases the (absolute value
of the) unconditional own-wage labor demand elasticity. This is not only true
for the average worker, but also for different skill groups. For the median
firm, the elasticity is three-quarters higher when comparing exporting to nonexporting
firms