scholarly journals How Do Firms Respond to Reduced Labor Costs? Evidence from the 2007 Swedish Payroll Tax Reform

2021 ◽  
Author(s):  
Sven-Olov Daunfeldt ◽  
Anton Gidehag ◽  
Niklas Rudholm
Keyword(s):  
Tax Reform ◽  
Cost Savings ◽  
Labor Cost ◽  
Policy Instrument ◽  
Extensive Margin ◽  
Labor Costs ◽  
Payroll Tax ◽  
Payroll Taxes ◽  
Wage Effect ◽  
Marginalized Groups

AbstractOne way for policymakers to reduce labor costs and stimulate the recruitment of marginalized groups of labor in a highly unionized economy is to lower payroll taxes. However, the efficiency of this policy instrument has been questioned, and previous evaluations have mostly found small employment effects for such reforms. We investigate the effects of a payroll tax cut in Sweden that decreased firms’ labor costs in relation to the number of young employees that they had employed when the reform was implemented in 2007. We find that most firms received small labor cost savings as a result of the reform, but those that received larger cost savings increased their number of employees significantly more than firms that received no, or minor, labor cost savings. Our findings also suggest that the payroll tax cut increased the total wages paid to incumbent workers, but the wage effect was too small to offset the positive extensive-margin employment effect of the reform. In total, we find that the Swedish payroll tax reform created 18,100 jobs over the period 2006–2008; most of these jobs were within the targeted group of young employees.

scholarly journals Work incentives in the Social Security Disability benefit formula

2018 ◽  
Vol 18 (2) ◽  
pp. 165-189 ◽  
Author(s):  
GOPI SHAH GODA ◽  
JOHN B. SHOVEN ◽  
SITA NATARAJ SLAVOV
Keyword(s):  
Social Security ◽  
Older Workers ◽  
Extensive Margin ◽  
Disability Benefit ◽  
Payroll Tax ◽  
Payroll Taxes ◽  
The Social ◽  
Social Security Disability ◽  
Work Disincentives ◽  
Different Levels

AbstractWe examine the connection between taxes paid and benefits accrued under the Social Security Disability Insurance (SSDI) program on both the intensive and extensive margins. We perform these calculations for stylized workers given the existing benefit structure and disability hazard rates. On the intensive margin, we examine the effect of an additional dollar of earnings on the marginal payroll taxes contributed and future benefits earned. We find that the present discounted value of disability benefits received from an additional dollar of earnings, net of the SSDI payroll tax, generally declines with age, becoming negative around age 40 and reaching almost zero at age 63. On the extensive margin, we determine the effect of working an additional year on the additional payroll taxes and future benefits as a percentage of income. The return to working an additional year at an income level just large enough to earn Social Security credits for the year is large and positive through age 60. However, the return to working an additional full year is substantially smaller and becomes negative at approximately age 57. Thus, older workers face strong incentives to earn enough to obtain creditable coverage through age 60, but they face disincentives for additional earnings. In addition, workers aged 61 and older face work disincentives at any level of earnings. We repeat this analysis for stylized workers at different levels of earnings and find that, while the program transfers resources from high earners to low earners, the workers experience similar patterns in the returns to working.

Improving Manufacturing Management with Activity Based Costing

2012 ◽  
Vol 472-475 ◽  
pp. 2494-2501 ◽  
Author(s):  
Michael L. Werner ◽  
Fu Yuan Xu
Keyword(s):  
Financial Reporting ◽  
Cost Savings ◽  
Indirect Costs ◽  
Labor Cost ◽  
Activity Based Costing ◽  
Labor Costs ◽  
Product Cost ◽  
Manufacturing Enterprises ◽  
Product Costing ◽  
Product Costs

The calculation of product cost in modern manufacturing enterprises includes assigning direct costs and indirect costs (overhead) to products. Direct material and direct labor costs can be traced to individual products or batches of products. However, because overhead is an indirect cost and benefits more than one product, it is difficult if not impossible to determine the true overhead cost associated with the overhead resources consumed to manufacture individual products produced. The factory resources included in overhead are an important component of manufacturing product. Overhead costs have traditionally been allocated to products using allocation bases which are correlated to the incurrence of cost such as direct labor hours, direct labor cost, or machine hours using one or few plant-wide allocation base for this purpose. The resulting product costs are used for external financial reporting and are also often used internally as a source of information for management decisions. The information provided by traditional cost systems is often so inaccurate it causes managers to do the wrong things. Further, traditional product costing offers little help to managers in their efforts to reduce costs. Activity based costing is a technique that allocates cost based on activities and volumes that cause cost. The use of these cost causes, called cost drivers, significantly increases product cost accuracy and also encourages managers to take cost-cutting actions that result in true cost savings to the firm. This paper will explore activity based costing and how it can help manufacturers to increase product cost accuracy and to reduce costs.

scholarly journals Research on the Impact of Rising Labor Cost on Trade between China and Japan ——Based on the perspective of ternary margins

2021 ◽  
Vol 235 ◽  
pp. 02066
Author(s):  
Lulu Wang ◽  
Jing Deng
Keyword(s):  
Labor Cost ◽  
Extensive Margin ◽  
Labor Costs ◽  
Negative Effects ◽  
Positive Effects ◽  
China And Japan ◽  
The Government ◽  
The Impact ◽  
Textile Products

This paper calculated the extensive margin, price margin and quantity margin of trade growth between China and Japan during 2000-2018, and analyzed the impact of rising labor costs on trade between China and Japan based on the perspective of ternary margins. The results show that the rising labor cost has both positive and negative effects on the growth of China’s export to Japan, also has different effects on different kinds of products. Specifically, there are significant positive effects on the extensive margin of animal and plant products and textile products, the price margin of chemical products and the quantity margin of textile products. The Government should formulate relevant policies, make the labor factors have reasonable distribution, and promote the long-term and stable development of trade between China and Japan.

scholarly journals Mechanical Canopy Management Reduces Labor Costs and Maintains Fruit Composition in ‘Cabernet Sauvignon’ Grape Production

2012 ◽  
Vol 22 (4) ◽  
pp. 509-516 ◽  
Author(s):  
S. Kaan Kurtural ◽  
Geoffrey Dervishian ◽  
Robert L. Wample
Keyword(s):  
Cost Savings ◽  
Titratable Acidity ◽  
Labor Cost ◽  
Shoot Density ◽  
Soluble Solids ◽  
Cabernet Sauvignon ◽  
Canopy Architecture ◽  
Labor Costs ◽  
Management Options ◽  
Canopy Management

Three canopy management methods, hand pruning (HP), mechanical prepruning with hand shoot thinning (MP+HT), and mechanical box-pruning with mechanical shoot thinning (MP+MT), were applied with the objective of achieving similar and commercially marketable ‘Cabernet sauvignon’ grape (Vitis vinifera) yields while maintaining vine balance and comparing labor operations costs. Canopy management system labor operation cost estimates indicated a 62% and 80% labor savings with the MP+HT and MP+MT treatments, respectively when compared with HP. The total shoot density of the vines was unaffected by the treatments applied. However, the contribution of count shoots increased with the concomitant addition of mechanization to canopy management. All treatments achieved similar canopy architecture and microclimate. The treatments did not affect photosynthetically active radiation (PAR) intercepted in the fruiting zone of canopy at veraison. All treatments had similar yield, total soluble solids (TSS), juice pH, and titratable acidity (TA) at harvest. Berry skin total phenolics, anthocyanins, and tannins when measured at harvest were also similar among the treatments applied. All treatments tested were within acceptable Ravaz index limits of 5 to 10 lb/lb. However, only MP+MT treatment reached a near optimum leaf area to fruit ratio of 1.2 m2·kg−1 and pruning weight of 1.0 kg·m−1 for warm climate viticulture. The results of this study provide commercially acceptable mechanical canopy management options that may provide labor cost savings for winegrape growers in the San Joaquin Valley (SJV) of California.

scholarly journals Using Payroll Tax Variation to Unpack the Black Box of Firm-Level Production

2021 ◽  
Author(s):  
Youssef Benzarti ◽  
Jarkko Harju
Keyword(s):  
Black Box ◽  
Total Output ◽  
Tax Rates ◽  
Firm Level ◽  
Payroll Tax ◽  
Payroll Taxes ◽  
Input Factor ◽  
Experimental Variation ◽  
Quasi Experimental ◽  
Level Production

Abstract This paper uses quasi-experimental variation in payroll tax rates in Finland to investigate how firms use their input factors. We find that higher payroll tax rates lead to large employment responses and have no effects on employee-level earnings. As payroll taxes increase, firms substitute away from low-skilled, routine and manual workers. Higher firm-level payroll tax rates also slightly decrease the total output of firms. Our results imply that firm-level production and input factor choices are clearly affected by payroll taxes.

The Effects of Menu Costs on Retail Performance: Evidence from Adoption of the Electronic Shelf Label Technology

2020 ◽  
Author(s):  
Ioannis Stamatopoulos ◽  
Achal Bassamboo ◽  
Antonio Moreno
Keyword(s):  
Shelf Life ◽  
Operations Management ◽  
Cost Savings ◽  
Labor Cost ◽  
Price Adjustment ◽  
Menu Costs ◽  
Price Changes ◽  
Product Categories ◽  
Material Costs ◽  
Gross Margins

We use the adoption of electronic shelf labels (ESLs) by an international grocery retailer in 2015 to identify the effects of physical menu costs (i.e., labor and material costs of price adjustment) on retail performance. We find that the installation of ESLs increased gross margins substantially, which implies profit gains that go far beyond labor cost savings. We also explore the mechanism behind this effect. We find that the lift in gross margins was associated with an increase in quantity sold and a decrease in price per unit sold, and that the lift primarily came from low-shelf life product categories. Moreover, we find that more and smaller price changes occurred with ESLs. These additional price changes were mostly price decreases, and they were dispersed in time. Our findings are consistent with reductions in both variable and fixed menu costs (i.e., both costs that scale with the number of products affected and costs that do not). This paper was accepted by Vishal Gaur, operations management.

scholarly journals Analysis construction industry on the basis of price trends of labor cost

2018 ◽  
Vol 174 ◽  
pp. 04005
Author(s):  
Daniel Przywara ◽  
Adam Rak
Keyword(s):  
Construction Industry ◽  
Cost Estimation ◽  
Labor Cost ◽  
Cost Estimate ◽  
Labor Costs ◽  
Cost Estimates ◽  
Price Trends ◽  
Estimate Rate ◽  
Business Entities ◽  
The Impact

Records of the national, average pay rates in the construction industry, at quarterly intervals, allow cost - planning departments of contractors and investment services to assess current market conditions in the construction industry. Price quarterly publications, such as Sekocenbud and Intercenbud, contain important information, enabling production preparation departments to prepare a comparison of the production in-house labor rates with the market production labor rates. The article attempts to analyze the economic situation of domestic construction production in the years 2010-2016 based on the emerging price trends of the of labor cost estimates in this period, taking into account the impact of seasonal construction services. In "Polish cost estimates standards", the labor cost estimate rate is present in one form: the net labor cost estimate rate, which fully corresponds to the rate defined in calculation formulas. The rates of labor cost estimates, in individual regions of Poland, are shaped according to the presented market situations. This clearly is reflected in the periodic (quarterly) regional records of labor rates in the Sekocenbud system. The Act on prices of July 5, 2001 does not contain any normative regulations regarding the methods of cost estimation of construction works. The necessity to remain competitive forces large construction corporations to use a subcontracting system, involving several or even several dozen smaller, specialized in a narrow range of works, business entities in which labor costs are definitely lower, because they are reduced by a lower value of internal costs.

Understanding Welding Cost: Using Flux-Cored Arc Welding (FCAW) for Cost Reduction and Productivity Improvement

2014 ◽  
Author(s):  
Charles W. Patrick ◽  
William F. Newell
Keyword(s):  
Cost Reduction ◽  
Arc Welding ◽  
Cost Savings ◽  
Deposition Efficiency ◽  
Labor Cost ◽  
Production Operation ◽  
Shielded Metal Arc Welding ◽  
Significant Cost ◽  
Welding Operation ◽  
Flux Cored Arc Welding

Welding is often listed as a production operation that companies would like to reduce overall cost and improve productivity; however, most companies merely implement cost reduction programs focused on lowering welding consumable costs. Though significant and important, these associated material costs typically represent only a small percentage to the total cost, i.e., 10 to 20% (welding consumables 8 to 15% and power and equipment 2 to 5%) of the overall welding cost in a typical U.S. welding operation. To further reduce welding costs, companies need to look further. Since labor and overhead, which relates directly to productivity, represents approximately 80 to 85% of the overall cost of any given welding operation they also offer the greatest opportunities for significant cost reduction. Simply changing from Shielded Metal-Arc Welding (SMAW) to Flux-Cored Arc Welding (FCAW) can reduce labor cost and increase productivity. Due to the increased deposition efficiency and operating factor of FCAW the weld deposition rate increases thus translating into increased productivity. The increase in productivity, in turn, reduces labor cost by reducing the man-hours required for the completion of any given weld. An added benefit gained by using FCAW is that it also significantly reduces the skill level required by the welder to produce welds of equal quality. When all of these benefits are combined FCAW yields significant cost savings opportunities by reducing labor and simultaneously improving productivity.

Correlation Analysis on Urbanization Level and Labor Cost in China

2013 ◽  
Vol 64 (2) ◽  
Author(s):  
Chen Lisha ◽  
Sun Yifan ◽  
Amran Md Rasli
Keyword(s):  
Correlation Analysis ◽  
Urban Area ◽  
Continuous Improvement ◽  
Labor Cost ◽  
Impact Factors ◽  
Labor Costs ◽  
Urbanization Process ◽  
Urbanization Level ◽  
Positive Correlation ◽  
Speed Up

In recent years, China labor costs continue to rise, especially in urban area, in the form of wage and welfare. There are lots of impact factors that influencing the rising of labor cost in China, while in this paper, we will mainly focus on the urbanization process of China, and correlation between urbanization and labor cost are discussed in details according to the data from 1989 to 2009. We found that both of the urbanization level and labor cost level have rising trends, the changes of the two have a positive correlation, and with the continuous improvement of urbanization level, labor costs will increase and speed up with the acceleration of urbanizing process.

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