neutralised, for example, by imposing a constant wedge, the employment impact will depend on the nature of the unemployment …In order to alleviate unemployment it is often recommended to reduce social security contributions (SSC) and to … compensate for the ensuing loss in revenues by a rise in the value-added tax (VAT). Assuming unemployment to be caused by …

In an efficiency wage economy with variable profits, a shift from payroll to employment taxes will reduce unemployment … if the tax level is held constant at the initial wage. However, unemployment will rise if firms are constrained to zero … profits in the long-run and if tax revenues are constant. This reversal of employment effects occurs because the shift in …