Wage subsidies, work incentives, and the reform of the Austrian welfare system

Arbeitspapier

We analyze the labor supply and income effects of a needs-based minimum benefit system ('Bedarfsorientierte Mindestsicherung') to be introduced in Austria by the end of this/beginning of next year. The aim of this reform is to reduce poverty as well as increasing employment rates of recipients of social assistance. On the basis of a behavioral microsimulation model we show that this new system will slightly increase incomes for the poorest households and slightly reduce labor supply due to the generous allowances for marginal employment under the current and the planned regulations of unemployment assistance. As an alternative, we analyze a reform proposal which reduces financial incentives for marginal employment not covered by social security, and rewards working longer hours by a wage subsidy. Although this alternative reform would yield modest positive labor supply effects, a relatively large number of households would suffer income losses.

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• ISBN: 978-3-941240-31-5
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionsbeiträge ; No. 2010/19

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Time Allocation and Labor Supply
• Subject: work incentives ; labor supply ; social safety system ; microsimulation ; Sozialreform ; Soziale Mindestsicherung ; Lohnsubvention ; Wirkungsanalyse ; Arbeitsangebot ; Ökonomischer Anreiz ; Niedrigeinkommen ; Mikrosimulation ; Österreich

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Steiner, Viktor ; Wakolbinger, Florian
• Event: Veröffentlichung
• (who): Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
• (where): Berlin
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/43687