Work Incentives and Labor Supply Effects of the 'Mini-Jobs Reform' in Germany
Viktor Steiner and
Katharina Wrohlich ()
No 438, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
We analyze the work incentives and labor supply effects of the so-called mini-jobs reform (subsidies of social security contributions to people with low-earnings jobs) introduced in Germany in April 2003. The analysis is based on a structural labor supply model embedded in a detailed tax-benefit microsimulation model for which we use the German Socio-Economic Panel (GSOEP). Our simulation results show that the likely employment effects of the mini-jobs reform will be small. The small positive participation effect is outweighed by a negative hours effect among already employed workers. The fiscal effects of the reform are also likely to be negative. We conclude that the analyzed mini-job reform is not an effective policy to increase employment of people with low earnings capacity.
Keywords: Mini-Job (search for similar items in EconPapers)
JEL-codes: J22 H31 (search for similar items in EconPapers)
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