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Indicators of unemployment and low-wage traps (Marginal effective tax rates on labour)

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Author Info
Giuseppe Carone (European Commission)
Aino Salomaki (European Commission)
Herwig Immervoll (OECD)
Dominique Paturot (OECD)

Additional information is available for the following registered author(s):

Abstract

This paper presents results of an on-going joint European Commission / OECD project, aimed at monitoring the direct influence of tax and benefit instruments on household incomes. Indicators of financial work incentives are needed for identifying any undesired influences of taxes and social transfers on people’s work decisions. Marginal effective tax rates (METRs) are calculated in order to show what part of a change in earnings is “taxed away” by the combined operation of taxes, social security contributions (SSCs), and any withdrawal of earnings related social benefits. Three different types of METRs are calculated in order to measure so-called low-wage,unemployment and inactivity traps, that is situations where incentives to work are low. The results allow the identification of countries and family types that face little financial incentive to increase work effort or to take up a job.

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Publisher Info
Paper provided by EconWPA in its series Labor and Demography with number 0409007.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 105 pages
Date of creation: 15 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpla:0409007

Note: Type of Document - pdf; pages: 105
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Web page: http://129.3.20.41

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Related research
Keywords: Unemployment trap incentive to work METR tax on labour Make work pay unemployment benefits.

Find related papers by JEL classification:
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Francesco Daveri & Guido Tabellini, 2000. "Unemployment, growth and taxation in industrial countries," Economic Policy, CEPR, CES, MSH, vol. 15(30), pages 47-104, 04. [Downloadable!] (restricted)
    Other versions:
  2. Immervoll H, 2002. "The Distribution of Average and Marginal Effective Tax Rates in European Union Member States," EUROMOD Working Papers em2/02, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
  3. Berger F & Borsenberger M & Immervoll H & Lumen J & Scholtus B & De Vos K, 2001. "The Impact of Tax-Benefit Systems on Low Income Households in the Benelux Countries. A Simulation Approach Using Synthetic Datasets," EUROMOD Working Papers em3/01, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
    Other versions:
  4. Kletzer, Lori G, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 115-36, Winter. [Downloadable!] (restricted)
  5. Immervoll H & O'Donoghue C, 2003. "Employment Transitions in 13 European Countries. Levels, Distributions and Determining Factors of Net Replacement Rates," EUROMOD Working Papers em/3/03, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
    Other versions:
  6. Olympia Bover & Manuel Arellano & Samuel Bentolila, 2002. "Unemployment Duration, Benefit Duration and the Business Cycle," Economic Journal, Royal Economic Society, vol. 112(479), pages 223-265, April. [Downloadable!] (restricted)
    Other versions:
  7. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March. [Downloadable!]
  8. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December. [Downloadable!] (restricted)
  9. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. 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:
  11. Nickell, Stephen, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kari O. E. Alho, 2006. "Labour Market Institutions and the Effectiveness of Tax and Benefit Policies in Enchancing Employment: A General Equilibrium Analysis," Discussion Papers 1008, The Research Institute of the Finnish Economy. [Downloadable!]
  2. Primoz Dolenc & Milan Vodopivec, 2005. "Does work pay in Slovenia?," Financial Theory and Practice, Institute of Public Finance, vol. 29(4), pages 341-362. [Downloadable!]
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