The labour market and fiscal impact of labour tax reductions: the case of reduction of employers' social security contributions under a wage norm regime with automatic price indexing of wages.

This paper investigates the possible labour market and fiscal impacts of labour tax reductions in a typically Belgian setting, i.e. a wage norm regime with automatic price indexing of wages. We consider reductions in employers' social security contributions and fiscal compensation through value added or production taxes. Reductions in employers' social security contributions can only have significant employment effects if they effectively reduce labour costs. These reductions are only partly self-financing, and the cost per job created is high. The remaining negative impact on the government b... Mehr ...