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Does Work Pay in France ? Monetary Incentives and and the Guaranteed Minimum Income

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  • Marc Gurgand

    (Crest)

  • David Margolis

    (Crest)

Abstract

Most 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.

Suggested Citation

  • Marc Gurgand & David Margolis, 2004. "Does Work Pay in France ? Monetary Incentives and and the Guaranteed Minimum Income," Working Papers 2004-34, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2004-34
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    1. David N. Margolis, 1996. "Cohort Effects and Returns to Seniority in France," Annals of Economics and Statistics, GENES, issue 41-42, pages 443-464.
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    6. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
    7. Marc Gurgand & David Margolis, 2000. "Minima Sociaux et Revenus du Travail en France," Working Papers 2000-62, Center for Research in Economics and Statistics.
    8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    9. repec:adr:anecst:y:1996:i:41-42:p:18 is not listed on IDEAS
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