Labor Tax Burden and Competitiveness of Latvian Enterprises

Forbes (Latvian edition) No. 10, April 2020, pp. 10-12

7 Pages Posted: 14 Jul 2020

Date Written: April 10, 2020

Abstract

The paper addresses the issues of regional and export competitiveness of the countries in the same region with similar level of economic development with regard to labor costs borne by employers. Research results demonstrate that the country with higher labor costs shows lower export indicators both at the regional and global levels. Moreover, this country has a larger share of shadow economy. The research indicates that some enterprises in the country with higher labor costs do not fully cover personal income tax and mandatory social security contributions in order to sustain their competitiveness, whereas the companies that fully cover these taxes demonstrate lower profitability and, consequently, lower development potential, which reduces their chances to increase their regional and export competitiveness.

Keywords: Labor tax burden, Personal income tax, Regional competitiveness of enterprises, Exports, International Trade, Shadow Economy

JEL Classification: F14, H21, H24, O17

Suggested Citation

Prohorovs, Anatolijs, Labor Tax Burden and Competitiveness of Latvian Enterprises (April 10, 2020). Forbes (Latvian edition) No. 10, April 2020, pp. 10-12, Available at SSRN: https://ssrn.com/abstract=3620565 or http://dx.doi.org/10.2139/ssrn.3620565

Anatolijs Prohorovs (Contact Author)

RISEBA University ( email )

Meza iela 3
Riga, LV-1048
Latvia

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