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Research Institute of Industrial Economics (IFN) Working Paper Series

No 1175:
Payroll Taxes and Firm Performance

Johan Egebark () and Niklas Kaunitz ()

Abstract: The Swedish employer paid payroll tax was reduced substantially for young workers in 2007, causing firms’ average social fees to depend on the age structure of their employees. Using pre-reform conditions to define treated and control firms, we show that the lower costs induced by the reduced taxes have no impact on exit rates or profitability. We find negligible effects on gross investments, and negative, but not statistically significant, effects on labor productivity.

Keywords: Payroll taxes; Labor costs; Profitability; Labor productivity; Investments; Windfall gain; Tax subsidy; Firm survival; (follow links to similar papers)

JEL-Codes: D22; H22; J38; L25; (follow links to similar papers)

29 pages, June 20, 2017

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