Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35417 
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers No. 3746
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
In 2007 and 2008 Polish governments introduced a series of reforms which led to a substantial reduction in the tax wedge (in Polish: klin) on labour. We show that when considered together the package of introduced reforms brought much greater reductions in the tax burden compared to a widely discussed 15% flat tax. In the analysis we show the effects of the reforms both for the employed and for the non-employed populations. The latter analysis is done in such a way as to account for the entire (simulated) distribution of wages of the non-employed and shows interesting differences between the effects of reforms on employed and non-employed individuals. We argue that to fully appreciate the effect of reductions in labour taxation it is important to bear in mind that one of the reasons for introducing them is to make employment more likely for those who currently do not work. Given the extent of the reductions in the klin it is somewhat surprising that so far so little attention has been given to the recent Polish reforms.
Subjects: 
Work incentives
tax wedge
labour costs
employment
JEL: 
H24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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