Visibility of social security contributions and employment

Resumen

In most countries employers and employees share the burden of social security contributions. According to standard incidence analysis, social security contributions aect negatively employment, but it is irrelevant how they are split between employers and employees. The magnitude of the eect depends only on the elasticities of labor demand and supply. Here I consider the possibility that: (i) workers perceive a linkage between contributions and future benets and, (ii) they discount more heavily employer�s contributions, because they are less \visible." Under these assumptions, I nd that employer�s contributions have a stronger (negative) eect on employment than employee�s contributions. I also nd that making employer�s contributions more visible to workers has always a positive eect on employment.