Household Labor Supply Effects of Low-Wage Subsidies in Germany

Holger Bonin (), Wolfram Kempe () and Hilmar Schneider ()
Additional contact information
Wolfram Kempe: Deutsche Bundesbank

No 637, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This research evaluates the impact on German household labor supply of various subsidy schemes proposed to foster low-wage employment. Using data from the German Socio- Economic Panel, we estimate a discrete choice model of household labor supply. On the basis of the estimated labor supply parameters of husbands and wives, we simulate participation and hours effects of different policies raising low labor earnings at the individual and household levels. In all cases, the labor supply effect is very moderate. Subsidies to individuals promote part-time employment, in particular of second earners, while subsidies based on low household income drive the better qualified partner out of the labor market so that the total number of labor market participants even declines.

Keywords: discrete choice; labor supply; low-wage subsidies; Germany (search for similar items in EconPapers)
JEL-codes: H24 J22 J38 J68 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2002-11
New Economics Papers: this item is included in nep-dcm and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

Published - published in: Journal of Applied Social Sciences Studies, 2003, 123 (1), 199-208

Downloads: (external link)
https://docs.iza.org/dp637.pdf (application/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:iza:izadps:dp637

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 ().