Social Security Tax Reform and Unemployment: A General Equilibrium Analysis for France
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Summary:
This paper develops and calibrates a simple general equilibrium model with two types of labor and capital for the French economy. The simulation results indicate that targeted reductions in employer social security taxes have six times as large an effect on employment as untargeted reductions for equal initial budgetary cost, while employee social security tax reductions have a negative effect on employment. They also point to the presence of “self-financing,” whereby reductions in various tax rates lead to lower budget deficits in the long run, as a result of an expanding tax base and lower unemployment insurance outlays.1
Series:
Working Paper No. 1997/059
Subject:
Employment Income tax systems Labor Social security contributions Taxes Unemployment Wages
English
Publication Date:
May 1, 1997
ISBN/ISSN:
9781451966008/1018-5941
Stock No:
WPIEA0591997
Pages:
29
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