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Is Belgium "Making Work Pay" ?

Kristian Orsini ()

Brussels Economic Review, 2007, vol. 50, issue 2, 193-220

Abstract: In the period 2001-2004 two major reforms followed in Belgium: a personal income tax reform which included a new tax credit on low earnings (2001) and a reform of social security contributions for low wage employees (2004). Using a discrete hours labor supply model, this paper assesses the impact of these reforms on aggregate labor supply of couples. Results suggest that the reforms had a positive (but moderate) effect on both participation and hours worked. Targeted reductions in social security contributions, nevertheless, proved to be more effective in stimulating aggregate labour supply, whereas the tax credit had a stronger effect on participation.

Keywords: Tax-benefit Systems; Microsimulation; Household Labour Supply; Multinomial Logit (search for similar items in EconPapers)
JEL-codes: D31 H21 H23 H24 H31 J22 (search for similar items in EconPapers)
Date: 2007
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