Relationship between Employment and Effective Taxation of Labour on Enterprise Level in the EU
Relationship between Employment and Effective Taxation of Labour on Enterprise Level in the EU

Summary/Abstract: The taxation of labour affects labour supply and demand, influencing the decisions of both employees and employers. As the effects of labour taxation are often contradictory, final relationships between the labour tax and other variables are not always transparent. In order to describe (reveal) the relationship between effective taxation of labour and the number of employees as well as between effective taxation of labour and the ratio of employment costs to total company costs, both adjusted for the company size and a country’s economic level, we conducted the empirical analysis of 19 EU countries using the Amadeus dataset of firms for the years 2010 – 2013. We emphasize the data- -oriented discussion about the correct specification of a regression model. Over the whole research period, the results show a negative relationship for the two dependent variables analysed.

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