Do Labour Taxes (and their composition) Affect Wages in the Short and In the Long Run?

The paper studies the relationship between labour taxes and labour costs by modelling the wage formation mechanism in a dynamic context. Findings suggest that there is probably some wage resistance in the short-term but not in the long-term, although the transition to the long-term can be very long and therefore the short-term impact and the dynamics of adjustment can be long-lasting.