Social Security Systems, Real Wage Resistance and Employment: an Empirical Analysis of the Competitiveness of Social Security Systems

Social Security Systems, Real Wage Resistance and Employment: an Empirical Analysis of the Competitiveness of Social Security Systems

Period: 01.03.2000 – 30.09.2001

The quintessence of the project were the questions to what extent changes in social security contributions affect labour costs and how the structure of the social security system has an impact on this relation. With contribution burdens expected to rise further, labour costs, the positioning of countries in international competition and, finally, employment will all depend decisively on the way changes in contributions are handled in the wage determination process. As theoretical work has shown, this may depend to a large extent on the design of the social security system. The amount of redistribution effects in social security systems and the level of tax and contribution rates in relation to workers' compensation could both be important in this respect. The principal database for the empirical investigation are national account statistics from the OECD member countries. From the results, we note substantial results in the degree of real wage resistance both across countries as well as across different kinds of contributions. For instance, direct taxes tend to influence labour costs more heavily than employers' social security contributions. Real wage resistance seems to be highest where the level of taxes and contribution rates is greatest. The tradtional view, based on incidence theory, that the burden of taxes and social security contributions falls exclusively on employees is rejected for most countries of the sample.

Project members

Bernhard Boockmann

Bernhard Boockmann

Project Coordinator
Senior Researcher

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Margit Kraus

Margit Kraus

Senior Researcher

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Cooperation partner
Forschungsbereich Unternehmensbesteuerung und Öffentliche Finanzwirtschaft, ZEW, Mannheim, DE

Selected Publications

Die Finanzierung der sozialen Sicherung: Wirkungen auf Löhne und Beschäftigung in ausgewählten Industrieländern

Boockmann, Bernhard, Ralf-Henning Peters and Viktor Steiner (2003), Die Finanzierung der sozialen Sicherung: Wirkungen auf Löhne und Beschäftigung in ausgewählten Industrieländern, Zeitschrift für Sozialreform 49 , 86-108

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