Financial Incentives to Work Decomposed: The Finnish Case

Mauri Kotamäki and Joonas Ollonqvist
Additional contact information
Mauri Kotamäki: Tela
Joonas Ollonqvist: University of Turku
Authors registered in the RePEc Author Service: Mauri Kotamäki

No 119, Discussion Papers from Aboa Centre for Economics

Abstract: This paper analyses financial incentives to work in Finland from three perspectives. First, the financial incentives to work are quantified i.e. the participation tax rate (PTR) levels are calculated with numerous classifications. Second, a question of how different parts of the tax and social security system affect work incentives is answered; the PTR is decomposed so that the quantitative contribution of different tax and social security components is given. Third, subgroup decomposition method is applied to explain how variation in PTR is explained by various characteristics of individuals. We found that taxation and unemployment benefits account the largest shares of the mean PTR. Another finding is that PTRs vary substantially and the benefit side and length of unemployment explain this variation quite well. However, the majority of the variation cannot be explained.

Keywords: microsimulation; work incentives; labor supply; taxes; benefits (search for similar items in EconPapers)
JEL-codes: H24 J22 J31 J65 (search for similar items in EconPapers)
Pages: 43
Date: 2018-10
New Economics Papers: this item is included in nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ace-economics.fi/kuvat/dp119.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:tkk:dpaper:dp119

Access Statistics for this paper

More papers in Discussion Papers from Aboa Centre for Economics Contact information at EDIRC.
Bibliographic data for series maintained by Susmita Baulia ().