%0 Report
        %A Burda, Michael C.
%A Weder, Mark
        %T Payroll Taxes, Social Insurance and Business Cycles
        %D 2010
        %8 2010 Aug
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 5150
        %U https://www.iza.org/publications/dp5150
        %X Payroll taxes represent a major distortionary influence of governments on labor markets. This paper examines the role of payroll taxation and the social safety net for cyclical fluctuations in a nonmonetary economy with labor market frictions and unemployment insurance, when the latter is only imperfectly related to search effort. A balanced social insurance budget renders gross wages more rigid over the cycle and, as a result, strengthens the model's endogenous propagation mechanism. For conventional calibrations, the model generates a negatively sloped Beveridge curve as well as substantial volatility and persistence of vacancies and unemployment.
        %K consumption-tightness puzzle
%K unemployment
%K payroll taxes
%K labor markets
%K business cycles