Do employment-conditional earnings subsidies work?
No 15/10, ImPRovE Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp
Cash transfers and tax credits to people in paid work but with low earnings are increasingly prominent in affluent countries. How effective are these programs at reducing poverty and increasing employment? The US and UK experience suggests that, in an economy with weak unions and limited labor market regulations, an employment-conditional earnings subsidy increases employment among persons at the low end of the labor market but reduces low-end wage levels somewhat. Overall, it appears to boost the absolute incomes of low-end households. Even so, cross-country comparison offers little support for a conclusion that the institutional configuration in these countries, including the employment-conditional earnings subsidy, is especially effective at generating high and rising employment, high and rising incomes among low-end households, or low and decreasing relative poverty rates. Quite a few other affluent nations have done as well as or better than the UK and the US in recent decades. In rich countries with stronger collective bargaining, employment-conditional earnings subsidies tend to be small, sector-specific, or temporary and so are unlikely to have sizeable effects on aggregate employment or incomes. Germany and Sweden have implemented larger versions. Germany's appears to have increased employment but reduced wage levels and low-end households incomes. Sweden's is too new to permit assessment of its impact.
Keywords: employment-conditional earnings subsidy; in-work benefit; earned income tax credit; social policy; employment; poverty (search for similar items in EconPapers)
JEL-codes: I38 I32 H24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
http://www.centrumvoorsociaalbeleid.be/ImPRovE/Wor ... vE%20WP%201510_1.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.centrumvoorsociaalbeleid.be/ImPRovE/Working%20Papers/ImPRovE%20WP%201510_1.pdf [302 Found]--> https://www.centrumvoorsociaalbeleid.be/ImPRovE/Working%20Papers/ImPRovE%20WP%201510_1.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hdl:improv:1510
Access Statistics for this paper
More papers in ImPRovE Working Papers from Herman Deleeck Centre for Social Policy, University of Antwerp Contact information at EDIRC.
Bibliographic data for series maintained by Tim Goedemé ().