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Is Belgium 'making work pay'?

  • Kristian Orsini

In the period 2001-2004 two major reforms followed in Belgium: a personal income tax reform (2001) and a reform of social security contributions for low skilled employees (2004). Using a discrete hours labor supply model, this paper assesses the impact of these reforms on aggregate labor supply of males and females in couples. Results suggest that the reforms had a positive (but moderate) effect on both participation and hours worked. Targeted reductions in social security contributions, however, proved to be more effective than the newly introduced tax credit on low earnings.

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0605.

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Date of creation: Mar 2006
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Handle: RePEc:ete:ceswps:ces0605
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