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Optimal Income Support for Lone Parents in the Netherlands: Are We There Yet?

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  • Henk-Wim de Boer
  • Egbert Jongen

Abstract

The Netherlands witnessed major reforms in income support for lone parents over the past decade. The goals of these reforms were to improve the financial incentives to work and to simplify the system. We consider whether the new system can be considered (closer to) `optimal'. We employ the inverse-optimal method of optimal taxation to recover the implicit social welfare weights before and after the reforms. Before the reforms, the social welfare weights are not monotonically declining in income. After the reforms, this anomaly has disappeared for the group of lone parents as a whole, but remains for the subgroup of lone parents with a youngest child 0-3 years old. An optimal tax analysis suggests that, for a wide range of redistributive preferences, subsidies for working lone parents with a low income could be increased further.

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  • Henk-Wim de Boer & Egbert Jongen, 2017. "Optimal Income Support for Lone Parents in the Netherlands: Are We There Yet?," CPB Discussion Paper 361, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:361
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    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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