Evaluating the Cost- Effectiveness of In-Work Benefits: A Simulation Study for Switzerland

Gerfin Michael and Leu Robert E.
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Gerfin Michael: University of Bern,Bern, Switzerland
Leu Robert E.: University of Bern,Bern, Switzerland

German Economic Review, 2007, vol. 8, issue 4, 447-467

Abstract: Income support for working low-income families (the ‘working poor’) is on top of the political agenda in Switzerland. The current social assistance system is considered inadequate to support working poor households. Several European countries have introduced in-work benefits in order to make work pay. Based on a structural labour supply model, this paper provides microsimulation results of the effects of introducing different schemes of in-work benefits. It turns out that adding a minimum hours requirement to the current social assistance system is the most cost-effective reform. Onethird of expected costs can be attributed to behavioural changes in labour supply.

Keywords: Household labour supply; microsimulation; poverty; tax credits (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1111/j.1468-0475.2007.00414.x

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