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Evaluating the Cost- Effectiveness of In-Work Benefits: A Simulation Study for Switzerland

Author

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  • Gerfin Michael

    (University of Bern, Bern, Switzerland)

  • Leu Robert E.

    (University of Bern, Bern, Switzerland)

Abstract

Income support for working low-income families (the ‘working poor’) is on top of the political agenda in Switzerland. The current social assistance system is considered inadequate to support working poor households. Several European countries have introduced in-work benefits in order to make work pay. Based on a structural labour supply model, this paper provides microsimulation results of the effects of introducing different schemes of in-work benefits. It turns out that adding a minimum hours requirement to the current social assistance system is the most cost-effective reform. Onethird of expected costs can be attributed to behavioural changes in labour supply.

Suggested Citation

  • Gerfin Michael & Leu Robert E., 2007. "Evaluating the Cost- Effectiveness of In-Work Benefits: A Simulation Study for Switzerland," German Economic Review, De Gruyter, vol. 8(4), pages 447-467, December.
    • Handle: RePEc:bpj:germec:v:8:y:2007:i:4:p:447-467
    DOI: 10.1111/j.1468-0475.2007.00414.x
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