EconPapers    
Economics at your fingertips  
 

Tax-benefits reforms and the labor market: evidence from Belgium and other EU countries

Kristian Orsini ()

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: During the last decade, several EU countries have tried to tackle unemployment and low activity rates through extensive tax cuts. In an effort to encourage the taking up of work – especially amongst the less productive workers – policymakers have shown increasing interest in targeted tax and social security contribution rebates as well as in benefits conditional on being in employment. This paper surveys recent tax-benefit reforms in Germany, the Netherlands, Italy, the UK, France and Belgium, focussing in particular on the reforms carried out in the latter. The potential labor supply effect of the Belgian reforms are assessed via a discrete hours labor supply model. The results are then compared to similar evaluations of reforms implemented in the aforementioned countries. Results suggest than: (i) generalized tax cut are not always effective in stimulating labor supply; (ii) in several central continental Europe, social security contributions play a major role in determining the incentives to take up work; (iii) joint assessment of income for both purposes of taxation and benefit eligibility has unambiguous negative effects on the labor supply of secondary earners (i.e. mostly women); (iv) targeted reductions in taxes and social security contributions, as well as benefits conditioned on employment are effective means to promote employment, but (v) efficient design of these policies is of greatest importance in order to counter potential negative incentive effects on the population already in employment.

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: 2006-03
New Economics Papers: this item is included in nep-age and nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
https://lirias.kuleuven.be/bitstream/123456789/119276/1/Dps0606.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces0606

Access Statistics for this paper

More papers in Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven
Bibliographic data for series maintained by library EBIB ().

 
Page updated 2020-07-25
Handle: RePEc:ete:ceswps:ces0606