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Taxation and Employment - Product Image

Taxation and Employment

  • ID: 1946030
  • October 2011
  • 168 Pages
  • OECD Publishing

This publication examines the effects of taxation on employment, highlights the resulting policy challenges, and discusses the ways governments endeavour to address these challenges. Chapter 1 provides a broad overview of the effects of taxation on employment, examining how taxes on labour income can affect both the size of the labour force and the level of unemployment, and highlighting key areas of concern for tax policy makers. This analysis is then augmented in chapters 2-4 by the more detailed analysis of the effects of taxation on the employment of three groups where empirical research suggests that responses of labour supply to taxation may be relatively large: low-income workers, mobile highly-skilled workers, and older workers. As well as highlighting key areas of concern for tax policy makers, the report places a particular focus on the different measures that have been adopted by countries to attempt to overcome these problems, discussing, where possible, the main design features, and the advantages and disadvantages of the different approaches that have been adopted.

Executive Summary

Chapter 1. The Effects of Taxation on Employment: An Overview
-1.1. Employment in OECD countries
-1.2. The taxation of labour income in OECD countries
-1.3. Taxation and unemployment
-1.4. Taxation and labour supply
-1.5. Non-labour taxes and employment
-1.6. Key employment-related tax policy challenges
-1.7. Summary and Conclusions

Chapter 2. The Taxation of Low-Income Workers
-2.1. Trade-offs in designing tax-benefit systems: Consequences for employment
-2.2. Quantifying the financial disincentives to work
-2.3. Reducing the tax burden on labour
-2.4. In-work tax credits or benefits
-2.5. The effect of taxation on the demand for low-income workers

Chapter 3. The Taxation of Older Workers
-3.1. The retirement behavior of older workers
-3.2. Factors affecting retirement behavior
-3.3. Quantifying the financial incentive to retire
-3.4. The tax treatment of older workers and retirees
-3.5. Policies to improve work incentives for older workers
-3.6. The effect of taxation on the demand for older workers

Chapter 4. The Taxation of Mobile High-Skilled Workers
-4.1. The mobility of high-skilled workers
-4.2. The effect of tax on migration decisions
-4.3. Tax concessions for high-skilled workers: arguments for and against
-4.4. Tax concessions for high-skilled workers: key design issues

Annex A. Additional Labour Force and Tax Burden Information
Annex B. Additional Retirement Incentive Modelling Results

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