An Investigation of the Net Social Wage Ratio in Nine European Countries, 1995–2018

This article estimates the net social wage ratio, in a panel of nine European countries for the 1995–2018 period. Assuming that indirect taxes are partly paid by labor, it is found that the net fiscal position of the working class is negative in eight of the nine countries. On the contrary, when indirect taxes are assumed to be entirely paid out of surplus value the net social wage ratio is positive and substantial in all countries. Using this panel in order to econometrically investigate the determinants of the net social wage ratio, both when indirect taxes are partly paid by labor and when they are paid entirely by capital, we find that the economic cycle (unemployment rate), labor strength (the adjusted wage share), and the age structure of the population (the share of people over 70 years old in the total population) appear to influence it positively. JEL Classification : B51, H2, D33