TY  - RPRT
        AU  - Aleman-Pericon, Christian
AU  - Mimani, Pranav
AU  - Santaeulalia-Llopis, Raul
AU  - Wasmer, Etienne
        TI  - On the Incidence Neutrality of Employer and Employees Social Contributions, Again
        PY  - 2026/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18850
        UR  - https://www.iza.org/index.php/publications/dp18850
        AB  - This paper revisits the belief that the mix of employer and employee social security contributions is neutral for employment and equilibrium wages. We establish the conditions required for neutrality across competitive settings, institutional minimum wages, progressive taxation, and search-and-matching frictions. We show that statutory invariance breaks down due to an asymmetry in the tax wedge operating almost identically across all models. Tax neutrality is restricted to a knife-edge case that does not hold in modern labor markets. Statutory non-neutrality in the labor market is therefore relevant quantitatively because it arises as soon as marginal tax rates are above 20\%. This has implications for designing contemporary welfare and workfare policies.
        KW  - labor taxes
KW  - tax incidence
KW  - employment
KW  - search models
        ER  -