Safety net still in transition: labour market incentive effects of social support in Poland and Germany
AbstractMany aspects of the economic transition which started in 1989 in Poland are by now complete. However, the route Polish governments have so far taken concerning the system of support for low-income families still implies very different poverty alleviation schemes compared to those found in many developed countries. We examine the Polish system of social assistance in a comparative context with Germany and focus on its implications for financial incentives to work. The paper shows the effect of extending the financial support system for poorest families in Poland on labour market incentives. We demonstrate that assumptions concerning sharing of resources among families within households have significant implications on the resulting financial incentives and importantly change the implied consequences of the reforms. This is the case especially for singleadult families. 74% of single adults without children, and 53% of lone parents in Poland live in multi-family households. Given the limited role of the state in providing a means-tested safety net, these multi-family arrangements play an important role as far as alleviating poverty is concerned, but they also have significant implications for incentives on the labour market.
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Bibliographic InfoArticle provided by National Bank of Poland, Economic Institute in its journal Bank i Kredyt.
Volume (Year): 41 (2010)
Issue (Month): 3 ()
Note: Peter Haan thanks for the financial support of the German Science Foundation (DFG) in the project 1169 entitled “Work Incentives, Earnings-Related Subsidies, and Employment in Low-Wage Labour Markets”. Michal Myck acknowledges the support through the REVISER project, an RTN project financed by the European Commission (contract no. HPRN-CT-2002-00330). Data from the Polish Household Budgets Survey (Badanie Budżetów Gospodarstw Domowych, BBGD) collected by the Polish Central Statistical Office have been made available for development of the SIMPL microsimulation model by the Polish Ministry of Labour and Social Policy (MPiPS). The support of the MPiPS in the process of SIMPL’s development is gratefully acknowledged. We are grateful for useful comments to two anonymous referees. The usual disclaimer applies.
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More information through EDIRC
social assistance; within-household sharing; work incentives; transition;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
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- Andreas Peichl & Nico Pestel & Hilmar Schneider, 2010.
"Does Size Matter? The Impact of Changes in Household Structure on Income Distribution in Germany,"
CESifo Working Paper Series
3219, CESifo Group Munich.
- Andreas Peichl & Nico Pestel & Hilmar Schneider, 2012. "Does Size Matter? The Impact Of Changes In Household Structure On Income Distribution In Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(1), pages 118-141, 03.
- Andreas Peichl & Nico Pestel & Hilmar Schneider, 2010. "Does Size Matter? The Impact of Changes in Household Structure on Income Distribution in Germany," SOEPpapers on Multidisciplinary Panel Data Research 280, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Peichl, Andreas & Pestel, Nico & Schneider, Hilmar, 2010. "Does Size Matter? The Impact of Changes in Household Structure on Income Distribution in Germany," IZA Discussion Papers 4770, Institute for the Study of Labor (IZA).
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