The Incidence of Payroll Taxation: Evidence from Chile
Jonathan Gruber
No 5053, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Despite the growing reliance on payroll taxation worldwide, there is limited evidence on the incidence of payroll taxes. I provide new evidence by examining the experience of Chile before and after the privatization of its Social Security system. This policy change led to a sharp exogenous reduction in the payroll tax burden on Chilean firms; the average payroll tax rate in my sample fell from 30% to 5% over this six year period. I use data from a census of manufacturing firms, which contains information on firm specific tax payments and average wages. I find strong evidence that the incidence of payroll taxation was fully on wages, with no effect on employment. A potential weakness with this approach is that some of the variation in firm-specific tax rates may be spurious, for example due to measurement error in wages. I attempt to surmount this problem by using a variety of different estimators, all of which yield consistent evidence of full shifting.
JEL-codes: H22 (search for similar items in EconPapers)
Date: 1995-03
Note: LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)
Published as Gruber, Jonathan. "The Incidence Of Payroll Taxation: Evidence From Chile," Journal of Labor Economics, 1997, v15(3,Jul), Part 2, S72-S101.
Downloads: (external link)
http://www.nber.org/papers/w5053.pdf (application/pdf)
Related works:
Journal Article: The Incidence of Payroll Taxation: Evidence from Chile (1997)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:5053
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w5053
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().