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The tax wedge for employment income in Croatia is calculated using administrative microdata. The analysis covering the period 2014–2018 demonstrates that the average tax wedge dropped from 33.2% in 2014 to 31.2% in 2018, which is the result of changes to both the social insurance contributions and personal income taxation systems. In addition, the analysis shows that tax wedge levels in Croatia are substantially lower than what had been shown in previous research, where results were primarily derived by analyzing hypothetical individuals.

Tax Burden on Labor Income in Croatia: Calculation and Analysis Based on Administrative Data