Social Security Tax Reform and Unemployment: A General Equilibrium Analysis for France
IMF Working Papers, May 1, 1997
Source details
- Canonical URL
- Social Security Tax Reform and Unemployment: A General Equilibrium Analysis for France
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Bibliographic details
- Published: May 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451966008.001
Model and calibration
- Develops and calibrates a simple general equilibrium model with two types of labor and capital for the French economy.
- Model is used for simulation analysis of alternative social security tax reforms.
Key findings
- Targeted reductions in employer social security taxes have six times as large an effect on employment as untargeted reductions for equal initial budgetary cost.
- Employee social security tax reductions have a negative effect on employment.
- Simulations point to the presence of “self-financing,” whereby reductions in various tax rates lead to lower budget deficits in the long run as a result of an expanding tax base and lower unemployment insurance outlays.
Quantitative results and publication metadata
- Pages: 29
- Volume: 1997
- Issue: 059
- Series: Working Paper No. 1997/059
- DOI: https://doi.org/10.5089/9781451966008.001
- Stock No: WPIEA0591997
- ISBN: 9781451966008
- ISSN: 1018-5941
- Publication date shown: May 1, 1997
Policy implications
- Employer-targeted social security tax reductions are substantially more effective for employment creation per unit of initial budgetary cost than untargeted cuts.
- Reductions in employee social security taxes may be counterproductive for employment.
- Tax rate reductions can generate fiscal benefits over time through an expanding tax base and reduced unemployment insurance spending, implying partial or full long-run budgetary offsets (“self-financing”).
International Monetary Fund. "Social Security Tax Reform and Unemployment: A General Equilibrium Analysis for France", IMF Working Papers 1997, 059 (1997), accessed 9/17/2026, https://doi.org/10.5089/9781451966008.001
Content in this bundle
- Social Security Tax Reform and Unemployment: A General Equilibrium Analysis for France - WP/97/59