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Is Belgium "Making Work Pay" ?

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  • Kristian Orsini
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    Abstract

    In the period 2001-2004 two major reforms followed in Belgium: a personal income tax reform which included a new tax credit on low earnings (2001) and a reform of social security contributions for low wage employees (2004). Using a discrete hours labor supply model, this paper assesses the impact of these reforms on aggregate labor supply of couples. Results suggest that the reforms had a positive (but moderate) effect on both participation and hours worked. Targeted reductions in social security contributions, nevertheless, proved to be more effective in stimulating aggregate labour supply, whereas the tax credit had a stronger effect on participation.

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    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/80269/1/02-Orsini1.pdf
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    Bibliographic Info

    Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

    Volume (Year): 50 (2007)
    Issue (Month): 2 ()
    Pages: 193-220

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    Handle: RePEc:bxr:bxrceb:2013/80269

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    Related research

    Keywords: Tax-benefit Systems; Microsimulation; Household Labour Supply; Multinomial Logit;

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    References

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    1. Frederic Vermeulen, 2002. "A collective model for female labour supply with nonparticipation and taxation," Public Economics Working Paper Series, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics ces0214, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    2. Rolf Aaberge & Ugo Colombino & Steinar Strøm, 2004. "Do more equal slices shrink the cake? An empirical investigation of tax-transfer reform proposals in Italy," Journal of Population Economics, Springer, Springer, vol. 17(4), pages 767-785, December.
    3. Duncan, Alan & Giles, Christopher, 1996. "Labour Supply Incentives and Recent Family Credit Reforms," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(434), pages 142-55, January.
    4. Kristian Orsini, 2006. "Tax-benefits reforms and the labor market: evidence from Belgium and other EU countries," Center for Economic Studies - Discussion papers, Katholieke Universiteit Leuven, Centrum voor Economische Studiën ces0606, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
    5. Sutherland, Holly & Immervoll, Herwig & O'Donoghue, Cathal, 1999. "An introduction to EUROMOD," EUROMOD Working Papers EM0/99, EUROMOD at the Institute for Social and Economic Research.
    6. Mark P. Moore & Priya Ranjan, 2005. "Globalisation vs Skill-Biased Technological Change: Implications for Unemployment and Wage Inequality," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 115(503), pages 391-422, 04.
    7. van Soest, Arthur & Das, Marcel & Gong, Xiaodong, 2002. "A structural labour supply model with flexible preferences," Journal of Econometrics, Elsevier, Elsevier, vol. 107(1-2), pages 345-374, March.
    8. Peter Haan, 2005. "State Dependence and Female Labor Supply in Germany: The Extensive and the Intensive Margin," Discussion Papers of DIW Berlin 538, DIW Berlin, German Institute for Economic Research.
    9. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, Elsevier, vol. 13(6), pages 699-720, December.
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    Cited by:
    1. Olivier Bargain & Mathias Dolls & Dirk Neumann & Andreas Peichl & Sebastian Siegloch, 2013. "Comparing Inequality Aversion across Countries When Labor Supply Responses Differ," AMSE Working Papers 1323, Aix-Marseille School of Economics, Marseille, France.

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