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Welfare to Work

Author

Listed:
  • Giancarlo Corsetti
  • John Flemming
  • Seppo Honkapohja
  • Willi Leibfritz
  • Gilles Saint-Paul
  • Hans-Werner Sinn
  • Xavier Vives

Abstract

This chapter argues that traditional social programmes of the modern welfare state have concentrated on replacing the earnings which are not enjoyed by those without jobs.This offers an incentive to those capable of earning only very low wages to qualify for (higher) benefits by declining jobs which, as a result, are also not offered. An alternative is developed, already implemented in varying degrees in a number of countries, in which tax credits are used to supplement the wages available to low productivity workers – whose benefits when not in work may also be reduced after a period of joblessness. Traditional social insurance schemes used also to offer higher benefits for limited periods and this feature, too, should be reemphasised. A fairly detailed proposal is put forward on a basis which should allow the living standards of both the working and most of the non-working poor to rise at no net cost to governments while raising employment output and growth. In essence, it implies requiring government work in exchange for existing welfare benefits, cutting welfare benefits for those who do not work although they are classified as being able to, and paying a wage subsidy to those who take low-paid jobs in the private sector. Finally,

Suggested Citation

  • Giancarlo Corsetti & John Flemming & Seppo Honkapohja & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2002. "Welfare to Work," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 71-86, April.
  • Handle: RePEc:ces:eeagre:v::y:2002:i::p:71-86
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    File URL: http://www.cesifo-group.de/DocDL/FORUMSPECIAL_CHAP6_2002.pdf
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    References listed on IDEAS

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    1. 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.
    2. Nickell, Stephen J & Symons, James, 1990. "The Real Wage-Employment Relationship in the United States," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 1-15, January.
    3. A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, January.
    4. Hans-Werner Sinn, 2000. "The threat to the German welfare state," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(3), pages 279-294, September.
    5. Burgess, Simon M, 1988. "Employment Adjustment in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 98(389), pages 81-103, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Lars Calmfors, 2004. "Activation versus Other Employment Policies – Lessons for Germany," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(2), pages 35-42, October.
    2. Hans-Werner Sinn & Christian Holzner & Wolfgang Meister & Wolfgang Ochel & Martin Werding, 2006. "Aktivierende Sozialhilfe 2006 - das Kombilohn-Modell des ifo Instituts," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(02), pages 06-27, January.
    3. Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2004. "Labour Market Reform in Europe," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 49-60, October.
    4. Georges de Ménil, 2004. "EU-Erweiterung: Herausforderung durch die Zuwanderung aus den neuen Mitgliedsländern," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(14), pages 15-19, July.
    5. Georges de Menil, 2004. "Enlargement: The Challenge of Migration from the New Member States," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(3), pages 36-41, September.
    6. Wolfgang Ochel, 2005. "Hartz IV – Welfare to Work in Germany," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(2), pages 18-25, 07.
    7. Michael Berlemann & Marcel Thum, 2005. "Blooming landscapes in East Germany?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(4), pages 16-22, December.

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