IMF Working Papers

Labor Taxation in the Western Balkan: Looking Back and Forward

By Alain Jousten, Mario Mansour, Irena Jankulov Suljagic, Charles Vellutini

December 2, 2022

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Alain Jousten, Mario Mansour, Irena Jankulov Suljagic, and Charles Vellutini. Labor Taxation in the Western Balkan: Looking Back and Forward, (USA: International Monetary Fund, 2022) accessed November 9, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper examines how labor taxation (personal income taxes and social security contributions) in the Western Balkan contributes to labor market outcomes such as high informality and a significant gender gap in participation rates. We find that limited progressivity combined with high tax wedge on low incomes poses a major twin equity-efficiency challenge in the region, resulting in low redistributive capacity and inadequate incentives to enter the job market. Policy implications are discussed with a view to alleviating the excessively high tax wedges on low incomes, while improving progressivity of income taxation.

Subject: Labor, Labor markets, Labor taxes, Personal income tax, Tax policy, Tax wedge, Taxes, Wages

Keywords: Corporate income tax, Employer SSCs, Europe, Income taxation, Labor markets, Labor tax wedge, Labor taxation, Labor taxes, Personal income tax, Social security contributions, SSC reduction, Tax wedge, Wages, Western Balkan

Publication Details

  • Pages:

    33

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2022/239

  • Stock No:

    WPIEA2022239

  • ISBN:

    9798400227769

  • ISSN:

    1018-5941

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