Are employer contribution reductions absorbed by wage increases?

The recent high levels of immigration and youth unemployment mean that Europe in general, and Sweden in particular, face very significant labor market policy challenges. In this context, the retail sector is important as it represents a potential entry point for marginalized individuals who have not yet gained a foothold in the labour market. It is therefore of great importance to increase the understanding of the impact of various labor market reforms and how they affect the intended beneficiaries of the reform. An often overlooked possibility is that labor market reforms affect individuals who do not belong to the reform's target group, which in turn has consequences for the effectiveness of the reform. The purpose of this project is to study the previously overlooked effects of the reduction in employer's contributions for young people in 2007 by analyzing the wage development of the already established workforce in the retail trade. Unlike previous studies, the data material allows an analysis of various wage components and the number of hours worked for full-time individuals who were employed before the reform, i.e. individuals who were not intended to be affected by the reform. The project thus contributes new knowledge about the underlying adjustment mechanisms that affect the effectiveness of reforms aimed at reducing the labor costs of entrepreneurs.