Europe, Labor market, social policy and social services, Macroeconomics and macroeconomic policy, Research, tax wedge

Employment of unskilled labor force and tax wedge in Poland and in other OECD and Central and Eastern European Countries


The project intended to explain the causes of high structural unemployment in Poland. It is generally believed that the high level of unemployment in Poland is determined to a decisive degree by factors such as a restrictive labor code, high degree of unionization and/or the unemployment benefits system. The research provides macroeconomic and microeconomic evidence that the employment consequences of a tax wedge can be more severe for the low-skilled. Consequently, it argues that a high tax wedge can be potentially more harmful in countries abundant in this kind of labour. These results should send a strong message to policymakers, especially those in Central and Eastern Europe. The project was financed by a research grant provided by the Ministry of Education and Science, Poland and conducted by a team of CASE researchers: Marek Gora (coordinator), Mateusz Walewski, Artur Radziwill and Agnieszka Sowa. It was completed in the first quarter of 2006.

Georgraphical range: Poland and tentatively: Hungary, Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Romania and Bulgaria

Sponsor: State Committee for Scientific Research (Ministry of Scientific Research and Information Technology of Poland)