Measuring Worker Disincentives: Taxes, Benefits and the Transition into Employment
AbstractDisincentives to employment participation arising from the tax-benefit system have been a major concern for welfare reform. Data from the Household, Income and Labour Dynamics in Australia Survey are used to generate and test the robustness of three commonly used disincentive measures for non-working Australians: effective marginal tax rates, replacement rates and participation tax rates. The results of transition models suggest financial disincentives as measured in the current period have a large effect on employment outcomes one year later, and the replacement rate is the preferred measure for modelling disincentives facing the unemployed. While attracting most attention in the welfare-to-work debate, effective marginal tax rates are found to be an inappropriate measure of work disincentives facing the non-employed.
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Bibliographic InfoArticle provided by The Centre for Labour Market Research (CLMR), Curtin Business School in its journal Australian Journal of Labour Economics (AJLE).
Volume (Year): 14 (2011)
Issue (Month): 3 ()
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Web page: http://www.business.curtin.edu.au/business/research/journals-published-by-cbs/australian-journal-of-labour-economics
Welfare and Poverty Government Programs Provision and Effects of Welfare Programs Unemployment Models; Duration; Incidence; and Job Search Time Allocation and Labor Supply;
Find related papers by JEL classification:
- I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
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