The real effects of a decrease in social contribution the rates may depend on structural economic characteristics of the country where the policy shock takes place. We focus on two structural characteristics: (i) the competitive framework (competitive or non-competitive pricing rules at sectoral level where technologies can show constant and increasing returns to scale), and (ii) labour market mechanisms (implementing a matching unemployment approach). In a computational general equilibrium model we simulate the tax policy change using different revenue-neutral rules. The main conclusions are that these assumptions matter and their incidence is not straightforward.

Key words: Computational general equilibrium models, equal yield, matching unemployment, increasing returns to scale.
JEL classification: D58, H30, J64, L11.