<abstract xmlns="http://www.w3.org/1999/xhtml"><p> This paper examines the effects of lower labor tax burden in Croatia by using Computable general equilibrium (CGE) model. It is a 5-sector (households, firms, government, investors and foreigners) model and economy is disaggregated on three highly aggregated sectors. One of the major advantages of CGE modeling is the evaluation of the overall effects of policy changes, shocks and reforms in the economy. We do this by lowering taxes on labor and simulating changes of all endogenous variables in the model simultaneously. Lastly, we provide sensitivity analysis results. Our results suggest that it is possible to encourage domestic production by reducing taxes on labor, but the potential effects on unemployment should be revised as to get more accurate estimates.</p></abstract>

This paper examines the effects of lower labor tax burden in Croatia by using Computable general equilibrium (CGE) model. It is a 5-sector (households, firms, government, investors and foreigners) model and economy is disaggregated on three highly aggregated sectors. One of the major advantages of CGE modeling is the evaluation of the overall effects of policy changes, shocks and reforms in the economy. We do this by lowering taxes on labor and simulating changes of all endogenous variables in the model simultaneously. Lastly, we provide sensitivity analysis results. Our results suggest that it is possible to encourage domestic production by reducing taxes on labor, but the potential effects on unemployment should be revised as to get more accurate estimates.

General Equilibrium Effects of Lower Labor Tax Burden in Croatia

University of Zagreb, Faculty of Economics and Business, Zagreb,

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"General Equilibrium Effects of Lower Labor Tax Burden in Croatia"}

This paper examines the effects of lower labor tax burden in Croatia by using Computable general equilibrium (CGE) model. It is a 5-sector (households, firms,...

General Equilibrium Effects of Lower Labor Tax Burden in Croatia

Published Online: Dec 22, 2016

Page range: 1 - 14

DOI: https://doi.org/10.1515/zireb-2016-0009

Keywords
CGE, small open economy, Croatia, taxes on labor, general equilibrium effects

© 2016

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

General Equilibrium Effects of Lower Labor Tax Burden in Croatia

Published Online: Dec 22, 2016

Page range: 1 - 14

DOI: https://doi.org/10.1515/zireb-2016-0009

KeywordsCGE, small open economy, Croatia, taxes on labor, general equilibrium effects

© 2016

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
CGE, small open economy, Croatia, taxes on labor, general equilibrium effects