Trapped in inactivity? The Austrian social assistance reform in 2019 and its impact on labour supply
Michael Christl and
Silvia De Poli
No 2020-05, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre (Seville site)
Financial incentives affect the labour supply decisions of households, but typically the impact of such incentives varies significantly across household types. While there is a substantial literature on the labour supply effects of tax reforms and in-work benefits, the impact of changes in social assistance benefits has received less attention. This paper analyses the impact of the Austrian reform proposal 'Neue Sozialhilfe' ("New Social Assistance"), which was introduced in 2019 and substantially cut social assistance benefits for migrants and families with children. We show that the labour supply effects of these changes in social assistance differ substantially across household types. While women exhibit higher labour supply elasticities in our estimates, the overall effects of the reform are especially strong for men and migrants. Couples with children and migrants, i.e. the groups which were hit the hardest by the reform's social assistance reductions, show the strongest labour supply reactions to the 'New Social Assistance'. Furthermore, we show that overall the reform has a positive, but small, effect on the intensive margin of labour supply.
Keywords: social assistance; reform; labour supply; discrete choice; microsimulation; EUROMOD (search for similar items in EconPapers)
JEL-codes: H31 H53 J08 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp and nep-lab
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Working Paper: Trapped in Inactivity? The Austrian Social Assistance Reform in 2019 and its Impact on Labour Supply (2020)
Working Paper: Trapped in inactivity? The Austrian social assistance reform in 2019 and its impact on labour supply (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ipt:taxref:202005
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