This paper exploits several reforms of wage subsidies in the framework of the German Minijob program to investigate substitution and complementarity relationships between subsidized and non-subsidized labor demand. We apply an instrumental variables approach and use administrative data on German...

This paper exploits several reforms of wage subsidies in the framework of the German Minijob program to investigate substitution and complementarity relationships between subsidized and non-subsidized labor demand. We apply an instrumental variables approach and use administrative data on German...

I study a corporate tax reform in Brazil that reduces eligible firms’ payroll tax liability from an average of 31% to 12% of their total wage bill. The tax cut generates a 9.1% increase on employment and zero effect on wages. However, the reform deteriorates within firm wage inequality....