Economic and social impacts of tax wedge on wage income

daha sonra doldurulacaktırWage refers to the share of labor, which is among the factors of production, from the national income. The important existence of wage earners in the economic structure also necessitates the development of wage-related policies. Policies regarding wage income are not only limited to the amount of wages, but also include policies regarding tax and similar burdens on wages. Taxes and similar financial burdens that must be paid related to the wage are expressed as tax wedges. Some of the financial burdens included in the tax wedge are paid by the employer and some by the employee. Therefore, the tax wedge, which covers the financial burdens that must be paid, can be a factor that can affect economic and social factors. The aim of this study is to determine the economic and social effects of the tax wedge. In this direction, in the study, the economic effects of the tax wedge such as unemployment, foreign direct investment, economic growth, inflation and informality; social effects such as income distribution, poverty, human development and education are discussed. The economic effects of the tax wedge are examined through data obtained from 29 OECD countries between 2001 and 2018; and social effects were examined through data obtained from 24 OECD countries between 2005 and 2017. As a result of the study, it was determined that the increase in the tax wedge increased unemployment, fairness in income distribution and poverty; it had no effect on foreign direct investment; and it reduced the variables of economic growth, inflation, informal economy, human development and level of education. In this respect, the results obtained in the study are expected to guide policy makers and researchers.