Creating Low-Skilled Jobs by Subsidising Market-Contracted Household Work
We analyse the determinants of household work contracted in the German shadow economy. The German socio-economic household panel, which enumerates casual domestic employment, is used to estimate the demand for such household work. The regressors include regional wage rates, household income and several control variables for household composition. We find that the demand for household work in the shadow economy is very income elastic. This suggests that targeted wage subsidies, linked to household work agencies, would be very effective in raising the legal demand for domestic help. A wage subsidy of 50% of wage costs could thus establish up to 500,000 new jobs for previously unemployed or non-working low skilled workers. The net fiscal costs of such a scheme are about 6.200 euro per full-time job. In addition, society benefits from more law enforcement and from an increased female labour supply, especially of highly qualified mothers.
|Date of creation:||Feb 2004|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
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.:
- Rosenzweig, Mark R & Wolpin, Kenneth I, 1980. "Life-Cycle Labor Supply and Fertility: Causal Inferences from Household Models," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 328-348, April.
- Suen, W., 1995.
"Market-procured housework: The demand for domestic servants and female labor supply,"
Elsevier, vol. 2(1), pages 105-105, March.
- Suen, Wing, 1994. "Market-procured housework: The demand for domestic servants and female labor supply," Labour Economics, Elsevier, vol. 1(3-4), pages 289-302, September.
- Annette Mummert & Friedrich Schneider, 2001. "The German Shadow Economy: Parted in a United Germany?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 58(3), pages 286-286, July.
- Gronau, Reuben, 1987. "Home production -- A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 4, pages 273-304 Elsevier.
- Reuben Gronau & R. Layard, "undated". "Home Production - A Survey," University of Chicago - Population Research Center 85-2, Chicago - Population Research Center.
- Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
- Namkee Ahn & Sara La De Rica, 1997. "The underground economy in Spain: an alternative to unemployment?," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 733-743.
- Fortin, Bernard & Lacroix, Guy & Montmarquette, Claude, 2000. "Are Underground Workers More Likely to be Underground Consumers?," Economic Journal, Royal Economic Society, vol. 110(466), pages 838-860, October.
- Bernard Fortin & Guy Lacroix & Claude Montmarquette, 1997. "Are Underground Workers More Likely To Be Underground Consumers?," CIRANO Working Papers 97s-28, CIRANO.
- Fortin, Bernard & Lacroix, Guy & Montmarquette, Claude, 1997. "Are Underground Workers More Likely to be Underground Consumers?," Cahiers de recherche 9710, Université Laval - Département d'économique.
- Karsten Hank & Michaela Kreyenfeld, 2000. "Does the availability of childcare influence the employment of mothers? Findings from western Germany," MPIDR Working Papers WP-2000-003, Max Planck Institute for Demographic Research, Rostock, Germany.
- Tilman Brück & John P. Haisken-DeNew & Klaus F. Zimmermann, 2002. "Förderung von Agenturen für haushaltsnahe Dienstleistungen schafft Arbeitsplätze für Geringqualifizierte," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 69(23), pages 363-369.
- Schneider, Hilmar & Kempe, Wolfram, 2002. "Lohnabstandsgebot kein hinreichendes Kriterium für positive Arbeitsanreize im Niedriglohnbereich," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 8(4), pages 85-91.
- Jürgen Schupp, 2001. "Private Haushalte als Arbeitsgeber bleiben beschäftigungspolitisch von geringer Bedeutung: "Hausmädchenprivileg" überflüssig," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 68(13), pages 201-210.
- Hersch, Joni & Stratton, Leslie S, 1994. "Housework, Wages, and the Division of Housework Time for Employed Spouses," American Economic Review, American Economic Association, vol. 84(2), pages 120-125, May. Full references (including those not matched with items on IDEAS)