BanRep Blog: Labor Demand Responses to Payroll Taxes
Payroll taxes are key to financing public goods and benefits for workers, although they might increase labor costs for formal employers.
Publication Date:
Thursday, 20 March 2025
09:08
Payroll taxes are a key tool for financing public goods and benefits for workers. However, they may also increase labor costs for formal employers, discouraging formal job creation and shifting labor to the informal sector. The magnitude of these negative effects is uncertain and depends on several factors.
