Fighting Long-Term Unemployment with Targeted Employment Subsidies: Benefit Transfer Programme (BTP) versus Targeted Negative Income Tax (TNIT)
An important feature of the European unemployment problem is the disincentive to supply labour for low-productivity workers due to generous levels of non-labour income in conjunction with marginal effective tax rates of around 100% for low levels of income (poverty trap). Targeted employment subsidies are proposed to overcome this problem. Snower (1994, 1997) suggests a targeted employer subsidy scheme called "Benefit Transfer Programme (BTP)". Jerger/Spermann (1997) suggest a targeted employee subsidy scheme called "Targeted Negative Income Tax (TNIT)". Both proposals solve the poverty trap problem for a limited time period without additional fiscal costs. In this paper, the employment effects of BTP and TNIT are compared in an extended model of equilibrium unemployment. It turns out that TNIT may in practice be associated with higher employment effects than BTP due to the role of transaction costs and asymmetric information.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 218 (1999)
Issue (Month): 5+6 (May)
|Contact details of provider:|| Postal: |
Phone: +49 (0)641 99 22 001
Fax: +49 (0)641 99 22 009
Web page: http://wiwi.uni-giessen.de/home/oekonometrie/Jahrbuecher/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:218:y:1999:i:5-6:p:647-657. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Winker)
If references are entirely missing, you can add them using this form.