Labor market institutions and the incidence of payroll taxation

Jinyoung Kim, Seonghoon Kim, Kanghyock Koh

Research output: Contribution to journalArticlepeer-review


Despite the unambiguous predictions of the canonical model of a competitive labor market, empirical studies of the labor market effects of payroll taxation provide conflicting evidence. We estimate the labor market impacts of payroll taxation in Singapore, the country with the most competitive and flexible labor market among the countries investigated in the literature. By exploiting the sharp reduction in payroll tax rate when workers turn 60, we find that the reduced payroll tax rate in Singapore has a large effect on wages without changes in employment. Our meta-analysis shows consistent evidence that varying degrees of labor market competitiveness across places and time could explain the mixed results in the literature. Our findings corroborate the prediction of the canonical model that the welfare costs of social insurance programs financed by payroll taxes can be small in a competitive labor market.

Original languageEnglish
Article number104646
JournalJournal of Public Economics
Publication statusPublished - 2022 May


  • Labor market competitiveness
  • Labor market outcomes
  • Meta-analysis
  • Payroll tax
  • Regression discontinuity design
  • Tax incidence

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Labor market institutions and the incidence of payroll taxation'. Together they form a unique fingerprint.

Cite this