Research
WORKING PAPERS
Payroll Tax Reductions for Minimum Wage Workers: Relative Labor Cost or Cash Windfall Effects? New draft! CESifo Working Paper No.11076
Abstract: This paper uses administrative employer-employee data to uncover the effects of a large payroll tax reduction for minimum-wage workers in France. Exploiting the change in labor costs both at the job level and at the firm level, I find that the policy spurred an additional 13 percentage points increase in the number of minimum-wage jobs, and that these extra jobs stem exclusively from firms which had previously very few or no minimum-wage workers. On the other hand, firms which already employed workers at minimum-wage levels, and therefore benefit ex ante from a cash windfall, increase em- ployment irrespective of wage levels. These firms grow by an additional 4 percent in the first two years following the reform. This effect is stronger in liquidity-constrained and credit-constrained firms. Overall, these results show that not all firms react to changes in relative labor costs and highlight the importance of alleviating liquidity constraints for firm growth.
Presented at PSE Labor & public economics seminar (2019), IIPF Annual Conference (Glasgow 2019), Paris Taxation Seminar (2020), World Congress of the Econometric Society (2020), EEA Annual Congress (2020), Online Public Finance Seminar (2021), PSE Applied seminar (2021), LMU Public economics seminar (2021), ZEW Public Finance Conference (2021), LAGV Public Economics Conference (2021), EALE (2021), ETH-KOF seminar (2021), ASSA Annual Meeting (2022), University of Stavanger (2022), University of Exeter (2022), Universita degli Studi di Milano - la Statale (2022), VATT Institute for Economic Research (2022), OFCE Seminar (2022), Annual Meeting of the Norwegian Association of Economists (2022), Oslo Macro Group (2023), LISIT (2023), Wages Employment and Inequality workshop (Helsinki 2023), CESifo Area Conference on Public Economics (2024).
This paper was a finalist for the Distinguished CESifo Young affiliate award at the 2024 CESifo Area Conference on Public Economics.
WORK IN PROGRESS
Salience Effects of a French Reduction in Labor Costs (with Antoine Bozio and Clément Malgouyres)
Abstract: The efficiency of policies such as tax cuts is undermined if complexity, frictions or behavioral biases make incentives inoperative. In this paper, we question the assumption that firms are unitary and rational decision-makers and we investigate the importance of salience in the taxation of firms. We take advantage of a reform that affected the salience of a tax mechanism that reduced labor costs of workers paid below a certain threshold. The original policy was inefficient in fostering employment; one possible explanation was its lack of salience. A particularity of this policy (both before and after the reform) is a large discontinuity in labor costs around a wage threshold. Using linked employer- employee data on the universe of firms, we find a large increase in bunching at this threshold, consistent with an effect of salience. The excess mass is bigger in small firms and in firms with a large share of workers around the threshold. We interpret this as evidence that flexibility and mis-optimization costs can matter more than sophistication.
Presented at EU Tax observatory Workshop on the Economics of Taxation (Barcelona 2023). Scheduled: EALE (Bergen 2024).
The Effects of Taxing Overtime Hours: Quasi-Experimental Evidence from France (with Santiago Garriga, Simon Löwe and Dario Tortarolo)
Description: We exploit a series of changes in taxation of overtime hours in France to identify the elasticities of the demand and supply of overtime work. Using both exhaustive linked employer-employee data, administrative data on payroll taxes and survey data on paid vs unpaid overtime hours, we examine the effects of firm- and employee-side taxation on overtime hours, firm-level employment and the probability for firms of declaring or not overtime hours. While overtime work can have potentially large consequences on overall employment and on firms’ capacity to react to shocks, it remains unclear what drives labor demand and supply of overtime. This research project explores these channels.
Presented at EALE (Prague 2023).
Wage Incidence: Evidence from a Sectoral Tax in France (with Malka Guillot)
Scheduled talks: LAGV 2024, EEA 2024.
PhD DISSERTATION
The Dissertation comprises a version of the three works described above (June 2023).