Tax wedge

The so-called tax wedge describes the relationship between labor costs and net wages. While labor costs include all costs that the employer has to pay, for example for one hour of work, the net wage only refers to the amount that is actually left over for the employee. The difference is made by the social contributions that employers and employees have to pay, as well as income tax.

In many cases, the level of the tax wedge is related to the emergence of tax-induced unemployment. Compared to other countries, the tax wedge in Germany is relatively high - because of the relatively high social contributions.

Nach Berechnungen der OECD betrug er im Jahre 2004 für einen unverheirateten Arbeitnehmer, der im Produktionsbereich tätig ist und einen durchschnittlichen Verdienst hat, rund 40%

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