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• Stefano Scarpetta
• Andrea Bassanini

Problems of unemployment and low pay amongst the low-skilled and those with little work experience are severe in many OECD countries. Employment-conditional schemes are policy instruments designed to increase the employment prospects of the low-skilled as well as to support their living standard. In this paper a simple CGE model is developed to simulate the impact of the introduction of an employmentconditional scheme in four OECD countries. The simulated policy package is graduated on gross earnings with both “phase-in” and “phase-out” regions. The advantage of the CGE approach is to allow assessing the direct and indirect effects of the financing of the policy scheme on both labour demand and supply. The simulations suggest that employment effects on targeted households are significant while the impact on aggregate employment is modest. Furthermore, the cost-effectiveness of the policy package is found to depend crucially on the earnings distribution, the levels of taxes on ...

Les problèmes de chômage et de faible rémunération des salariés les moins qualifiés et de ceux qui possèdent une expérience de travail limitée sont importants dans de nombreux pays de l'OCDE. Les programmes d'aide conditionnés à l'exercice d'un emploi sont des instruments de politique économique destinés à améliorer les perspectives d'emploi des moins qualifiés, et à soutenir leur niveau de vie. Dans cet article, un modèle d'équilibre général calculable (EGC) est développé afin de simuler l'impact de l'introduction d'un programme d'aide conditionné à l'exercice d'un emploi dans quatre pays de l'OCDE. Les mesures de politique économique simulées sont graduées sur les revenus bruts, avec à la fois des zones "d'entrée" (phase-in) et de "sortie" (phase-out) des programmes. L'avantage de l'approche en termes d'EGC est de permettre d'évaluer les effets directs et indirects du financement du programme sur la demande et l'offre de travail. Les simulations suggèrent que les effets sur ...

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Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 224.

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Date of creation: 07 Oct 1999
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Handle: RePEc:oec:ecoaaa:224-en

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Keywords: low pay unemployment CGE model tax reform in-work benefits bas salaires chômage modèle EGC réforme fiscale prestations liées à l'exercice d'un emploi

Find related papers by JEL classification:
C68 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Computable General Equilibrium Models
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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1. Bruno, VAN DER LINDEN, 2003. "Unemployment insurance and training in an equilibrium matching model with heterogeneous agents," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2003001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
2. Giuseppe Carone & Aino Salomaki, 2004. "Reforms In Tax-Benefit Systems In Order To Increase Employment Incentives In The Eu," Labor and Demography 0410005, EconWPA. [Downloadable!]
   Other versions:
   • Carone, G. & Salomaki, A., 2001. "Reforms in Tax-benefit Systems in Order to Increase Emplyoment Incentives in the EU," European Economy - Economic Papers 160, Commission of the EC, Directorate-General for Economic and Financial Affairs (DG ECFIN).
3. Frank Oskamp & Dennis J. Snower, 2006. "The Effect of Low-Wage Subsidies on Skills and Employment," Kiel Working Papers 1292, Kiel Institute for the World Economy. [Downloadable!]

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