IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

The design of in-work benefits: how to boost employment and combat poverty in Belgium

Listed author(s):
  • Dieter Vandelannoote
  • Gerlinde Verbist
Registered author(s):

    In-work benefits have received increased attention over the past decades in OECD countries, as a core part of making-work-pay policies. They have two main objectives: on the one hand, increase employment by creating additional financial rewards for remaining in work or for taking up a low-paid job. On the other hand, reduce poverty by increasing incomes of disadvantaged groups of workers and their families. Both objectives of enhancing employment and reducing poverty have been extensively analysed for several countries. Most papers in this domain have investigated existing in-work benefits (for an overview see e.g. Kenworthy, 2015). We take a different approach as we evaluate the impact of different design components on work incentives and poverty indicators by building step-by-step a stylised working tax credit. By different design components we mean: is the working tax credit individual or household based? What is the impact of using an income threshold? What happens when a tapering-out or a tapering-in is implemented? The main question of this paper is thus whether and how the design of a working tax credit has an impact on work incentives and poverty figures. The focus of our analysis is Belgium, a country with a less dispersed income distribution as e.g. the United Kingdom or the USA (which are the countries who first implemented in-work benefits and for which the bulk of the evaluations have been done). We make use of BE-SILC 2012 data and built a discrete labour supply model to evaluate the impact of the design of an in work-benefit on work incentives. Simulations are done using the microsimulation model EUROMOD.

    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.

    File URL: http://www.centrumvoorsociaalbeleid.be/ImPRovE/Working%20Papers/ImPRovE%20WP%201615_1.pdf
    Download Restriction: no

    Paper provided by Herman Deleeck Centre for Social Policy, University of Antwerp in its series ImPRovE Working Papers with number 16/15.

    as
    in new window

    Length:
    Date of creation: Apr 2016
    Handle: RePEc:hdl:improv:1615
    Contact details of provider: Web page: http://improve-research.eu
    Email:


    More information through EDIRC

    References listed on IDEAS
    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.:

    as
    in new window


    1. François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a tool for evaluating redistribution policies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 77-106, April.
    2. 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.
    3. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
    4. Herwig Immervoll & Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2007. "Welfare reform in European countries: a microsimulation analysis," Economic Journal, Royal Economic Society, vol. 117(516), pages 1-44, 01.
    5. Raj Chetty & John N. Friedman & Emmanuel Saez, 2013. "Using Differences in Knowledge across Neighborhoods to Uncover the Impacts of the EITC on Earnings," American Economic Review, American Economic Association, vol. 103(7), pages 2683-2721, December.
    6. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 1039-1073.
    7. Nada Eissa & Hilary W. Hoynes, 2006. "Behavioral Responses to Taxes: Lessons from the EITC and Labor Supply," NBER Chapters,in: Tax Policy and the Economy, Volume 20, pages 73-110 National Bureau of Economic Research, Inc.
    8. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2014. "Comparing Labor Supply Elasticities in Europe and the United States: New Results," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 723-838.
    9. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    10. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
    11. Marchal, Sarah & Marx, Ive, 2015. "Stemming the Tide: What Have EU Countries Done to Support Low-Wage Workers in an Era of Downward Wage Pressures?," IZA Discussion Papers 9390, Institute for the Study of Labor (IZA).
    12. Lane Kenworthy, 2015. "Do employment-conditional earnings subsidies work?," ImPRovE Working Papers 15/10, Herman Deleeck Centre for Social Policy, University of Antwerp.
    13. Bea Cantillon & Sarah Marchal & Chris Luigjes, 2015. "Decent incomes for the poor: which role for Europe?," ImPRovE Working Papers 15/20, Herman Deleeck Centre for Social Policy, University of Antwerp.
    14. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
    15. repec:hdl:wpaper:1504 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:hdl:improv:1615. 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: (Tim Goedemé)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.