Workers' taxes, social benefits and the fiscal crisis in Southern Europe
by Thanasis Maniatis
International Journal of Management Concepts and Philosophy (IJMCP), Vol. 6, No. 1/2, 2012

Abstract: In the economic crisis the need for traditional expansionary fiscal policies to stimulate effective demand has faced a serious obstacle – public deficits and the levels of public debt. We examine empirically whether workers are responsible for the public deficits and the accumulated debt in the Southern European countries. By subtracting labour taxes from labour benefits derived from public spending we estimate the net social wage for the period, 1995 to 2008. The net social wage ratio expresses the net social wage as a percentage of the gross domestic product and reveals the significance of the positive or negative net fiscal position of the working class for the system as a whole. Our results suggest that the net social wage is always and everywhere negative in these years indicating that the fiscal imbalances in Southern European countries have not been caused by the subsidisation of the income of labour.

Online publication date: Fri, 17-Apr-2015

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