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Active Welfare State Policies and Labour Supply in Spain

Xisco Oliver () and Amedeo Spadaro ()
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Amedeo Spadaro: Universitat de les Illes Balears

Hacienda Pública Española, 2017, vol. 222, issue 3, 9-41

Abstract: This paper shows the effect of tax reforms aimed at encouraging Spanish mothers to join the labour market (or not to abandon it). The simulated reforms replace the current in-work benefit (of €100 a month) with more generous scenarios. The analysis is conducted using a behavioural microsimulation model of the Spanish tax-benefit system. The results show that in-work benefits boost the female labour participation rate and labour supply of low-income households (those with higher elasticities). Indeed there is an improvement in social welfare, but we should not overlook the impact on tax revenue.

Keywords: Microsimulation; tax policy; labour supply; in-work benefit (search for similar items in EconPapers)
JEL-codes: D31 H21 H23 C25 H31 J22 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:hpe:journl:y:2017:v:222:i:3:p:9-41