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Table 5 Sensitivity analysis (percentage change with respect to the benchmark)

From: The effect of payroll taxes on employment and wages under high labor informality

  Reform scenario A under benchmark Scenario A under lower valuation of CSI services Scenario A under higher valuation of CSI services Scenario A under higher valuation of NCSI transfers Scenario A under higher enforcement of payroll taxes
Employment      
Total employment(a) 0.3 0.2 0.4 0.3 0.3
 Salaried formal 3.7 3.5 5.1 3.8 4.1
 Salaried informal 0.9 1.5 −1.3 0.9 0.5
 Own-account −4.3 −4.8 −3.5 −4.4 −4.3
Earnings      
Formal gross wage −4.0 −4.0 −3.6 −3.8 −4.0
Formal net wage(b) 4.9 4.9 5.3 5.0 4.9
Informal gross wage 2.9 3.6 2.6 3.0 2.9
Informal net wage(b) 3.0 3.8 2.7 3.2 3.0
After-tax average earnings, own account 2.8 3.1 2.6 2.9 2.8
After-tax average earnings, employers 4.0 3.0 4.7 4.2 3.9
  1. Notes:
  2. (a)Salaried plus own-account workers.
  3. (b)Net of taxes/subsidies.
  4. Reform scenario A assumes a fall of 22.4 percent in labor taxes (equivalent to a decrease of 13.5 percentage points) and a lump-sum transfer to formal workers equivalent to 9 percent of their benchmark wage rate. See the main text for an explanation of each scenario.