"Making Work Pay" in a Rationed Labour Market

Aufsätze referiert extern - Web of Science

Olivier Bargain, Marco Caliendo, Peter Haan, Kristian Orsini

In: Journal of Population Economics 23 (2010), 1, S. 323-351


This paper empirically analyzes the labor supply effects of two "making work pay" reforms in Germany. We provide evidence in favor of policies that distinguish between low effort and low productivity by targeting individuals with low wages rather than those with low earnings. We discuss our results more generally and with comparisons to the family-based tax credits in force in the US and the UK. For the evaluation of the policies, we apply a static structural labor supply framework and explicitly account for demand-side constraints by using a double-hurdle model.

Peter Haan

Abteilungsleiter in der Abteilung Staat

JEL-Classification: C52;H31;J22
Keywords: Tax-benefit systems, Household labor supply, Involuntary unemployment