Does Work Pay in France ? Monetary Incentives and and the Guaranteed Minimum Income
AbstractMost welfare programs generate high marginal tax rates on labor income.This paper uses a representative sample of individuals on France's mainwelfare program (the Revenu Minimum d'Insertion, or RMI) to estimatemonetary gains to employment for welfare recipients. This is based on thedistribution of potential monthly earnings faced by each individual, as in-ferred from the distribution of observed wages and working time. Takingaccount of the welfare earnings top-up program (int¶eressement), we ¯ndthat gains are almost always positive, but that their amount is very low,especially for single mothers. Int¶eressement is found to have a small impact,because of its provisional nature. Gains are positively related to the prob-ability that a welfare recipient in 1996 will be observed in employment in1998. Using a simple structural model, we interpret this as a labor supplye®ect.
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Bibliographic InfoPaper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2004-34.
Date of creation: 2004
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