Veranstaltungen des DIW Berlin/
Events of DIW Berlin

26. Oktober 2016

Cluster-Seminar Öffentliche Finanzen und Lebenslagen Work Incentives in Europe: The Effect of Participation Tax Rates on Employment Decisions

Many advanced economies implemented labor market reforms over the past decades in order to encourage higher labor force participation rates. In this paper, we measure work incentives inherent in tax-benefit systems by computing Participation Tax Rates (PTRs) across the EU and subsequently identify the impact of these disperse PTRs on the probability of employment. We find that higher PTR-levels are negatively associated with the probability of being employed, i.e., higher work incentives increase the participation probability. The effect is larger for women than men. We estimate an average participation elasticity for women of 0.08 and 0.06 for men.

12:30 - 13:30
DIW Berlin (Eleanor-Dulles-Raum) DIW Berlin im Quartier 110 Raum 5.2.010 Mohrenstraße 58 10117 Berlin
im DIW Berlin
Tel.: +49 30 89789 268