Antoine Bozio (Paris Sch. Econ.), Thomas Breda (Paris Sch. Econ.), Julien Grenet (Paris Sch. Econ.) & Arthur Guillouzouic (Aix-Marseille Sch. Econ.), Does Tax-Benefit Linkage Matter for the Incidence of Payroll Taxes?, 93 Rev. Econ. Stud. 1536 (2026):

We analyse earnings responses to six large payroll tax and income tax reforms in France. Our findings indicate full pass-through to workers when there is a strong and transparent link between contributions and expected benefits. In contrast, employer payroll taxes with no tax-benefit linkage exhibit limited pass-through to workers, while income tax nominally borne by employees show nearly full pass-through. Together with a meta-analysis of the literature, we interpret these results as empirical support for the long-standing hypothesis that tax-benefit linkage matters for the incidence of payroll taxes. In the absence of such linkage, our findings suggest that the individual-level incidence of payroll taxes aligns with their statutory incidence.

From the conclusion:

From a policy perspective, our results provide empirical support for the argument that a clear tax-benefit linkage enhances efficiency when using payroll taxes to fund social insurance programmes. However, our analysis has some limitations. . . . [A]ggregate incidence remains uncertain for non-contributory payroll taxes: while we can firmly establish that contributory payroll taxes are fully borne by workers, the zero pass-through result observed at the individual level for non-contributory employer payroll taxes may still imply some degree of shifting to workers at the firm or market level. Further research is needed to better understand these dynamics and their broader implications for the optimal design of payroll taxes.