Konferenzbeitrag
How reliable are incidence estimates based on cross-sectional distributions? Evidence from simulations and linked employer-employee data
The paper validates an empirical approach developed by Alvaredo and Saez (2007) which estimates the economic incidence of social security contributions (SSC) on the basis of cross-sectional earnings distributions. The method utilizes discontinuities at earnings caps where the marginal SSC rate drops. It does not rely on policy reforms, panel data, or hours information. We demonstrate on the basis of simulations that this comes at the cost of ruling out optimization frictions and measurement error destroying identification. Behavioral responses and incidence heterogeneity are secondary problems. Exploiting German linked employer-employee data that provide separate measures of gross and net earnings we find substantial negative discontinuities in net earnings. Together with small, erratic discontinuities in gross earnings this provides consistent empirical evidence that legal and economic incidence of SSC coincide in Germany.
- Language
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Englisch
- Bibliographic citation
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Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Empirical Public Economics ; No. A14-V2
- Classification
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Wirtschaft
Taxation and Subsidies: Incidence
Wages, Compensation, and Labor Costs: Public Policy
Social Security and Public Pensions
- Event
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Geistige Schöpfung
- (who)
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Müller, Kai-Uwe
Neumann, Michael
- Event
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Veröffentlichung
- (when)
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2015
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Konferenzbeitrag
Associated
- Müller, Kai-Uwe
- Neumann, Michael
Time of origin
- 2015
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