This paper evaluates the effects of a fall in payroll taxes on employment and wages in the presence of high labor informality. For that purpose, the paper examines a recently approved tax reform in Colombia especially targeted to promote labor formality. The model suggests that the reform would...

In this paper we evaluate the effects of a regional experiment that reduced payroll-taxes by 3-6 percentage points for three years in Northern Finland. We match each firm in the target region with a similar firm in a comparison region and estimate the effect of the payroll-tax reduction by...