Labour Taxes and International Trade: The Role of Domestic Labour Value Added

By: Adarov, Amat.

Contributor(s): Holzner, Mario | Jovanović, Branimir | Vukšić, Goran.

Material type: materialTypeLabel

BookSeries: wiiw Working Papers: 205Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 2021Description: 51 S., 28 Tables and 2 Figures, 30cm.Subject(s): taxation | labour | international trade | exports | imports | labour shareCountries covered: EU | OECDwiiw Research Areas: Macroeconomic Analysis and Policy | International Trade, Competitiveness and FDIClassification: F14 | F16 | H24 | J32 Online resources: Click here to access online Summary: This paper revisits the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. Using sectoral data from 41 EU and OECD economies over the period 2005-2014, we assess how labour taxes affect exports and imports and how domestic labour value added shapes this relationship. We find that higher labour taxes reduce exports but that the effect depends to a large extent on the share of domestic labour value added, which differs by industries, countries and time periods. Imports do not seem to be affected. This implies that changes in labour taxes will not affect all sectors and countries in the same way and that policy makers should be aware of this when deciding on labour taxes. We also calculate the contribution of labour tax changes to the export dynamics in the analysed period and sample of countries, finding that in general the contribution is small.

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Item type	Current library	Call number	Status	Date due	Barcode
Paper	WIIW Library	5.700/205 (Browse shelf(Opens below))	Available		1000010005883

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This paper revisits the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. Using sectoral data from 41 EU and OECD economies over the period 2005-2014, we assess how labour taxes affect exports and imports and how domestic labour value added shapes this relationship. We find that higher labour taxes reduce exports but that the effect depends to a large extent on the share of domestic labour value added, which differs by industries, countries and time periods. Imports do not seem to be affected. This implies that changes in labour taxes will not affect all sectors and countries in the same way and that policy makers should be aware of this when deciding on labour taxes. We also calculate the contribution of labour tax changes to the export dynamics in the analysed period and sample of countries, finding that in general the contribution is small.

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