Does Work Pay in France? Monetary Incentives and the Guaranteed Minimum Income

Marc Gurgand and David Margolis

No 1467, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Most welfare programs generate high marginal tax rates on labor income. This paper uses a representative sample of individuals on France's main welfare program (the Revenu Minimum d'Insertion, or RMI) to estimate monetary gains to employment for welfare recipients. This is based on the distribution of potential monthly earnings faced by each individual, as inferred from the distribution of observed wages and working time. Taking account of the welfare earnings top-up program (intéressement), we find that gains are almost always positive, but that their amount is very low, especially for single mothers. Intéressement is found to have a small impact, because of its provisional nature. Gains are positively related to the probability that a welfare recipient in 1996 will be observed in employment in 1998. Using a simple structural model, we interpret this as a labor supply effect.

Keywords: transfers; labor earnings; welfare; tax-system (search for similar items in EconPapers)
JEL-codes: C34 I38 J31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2005-01
New Economics Papers: this item is included in nep-edu, nep-eec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published as 'Does work pay in France? Monetary incentives, hours constraints, and the guaranteed minimum' in: Journal of Public Economics, 2008, 92 (7), 1669-1697

Downloads: (external link)
https://docs.iza.org/dp1467.pdf (application/pdf)

Related works:
Working Paper: Does work pay in France? Monetary incentives and the guaranteed minimum income (2005)
Working Paper: Does work pay in France? Monetary incentives and the guaranteed minimum income (2005)
Working Paper: Does work pay in France? Monetary incentives and the guaranteed minimum income (2005)
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:iza:izadps:dp1467

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().