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The Impact of In-Work Benefits on Employment and Poverty

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  • Dieter Vandelannoote
  • Gerlinde Verbist

Abstract

This article studies the impact of design characteristics of in-work benefits on employment and poverty in an international comparative setting, taking account of both first and second order effects. We use the microsimulation model EUROMOD, which has been enriched with a discrete labour supply model in order to take account of labour supply reactions. The analysis is performed for four EU-member states: Belgium, Italy, Poland and Sweden. The results show that design characteristics matter substantially, though the specific effects differ in magnitude across countries, indicating there is no one-size-fits-all solution. Throughout the analysis, numerous trade-offs are uncovered: not only between employment and poverty goals, but also within employment incentives itself (extensive vs. intensive margin). Taking account of behavioral reactions attenuates the impact on poverty outcomes, signaling the importance of bringing these effects into the empirical analysis.

Suggested Citation

  • Dieter Vandelannoote & Gerlinde Verbist, 2017. "The Impact of In-Work Benefits on Employment and Poverty," Working Papers 1702, Herman Deleeck Centre for Social Policy, University of Antwerp.
    • Handle: RePEc:hdl:wpaper:1702
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    2. Ulrike Huemer & Rainer Eppel & Marion Kogler & Helmut Mahringer & Lukas Schmoigl & David Pichler, 2021. "Effektivität von Instrumenten der aktiven Arbeitsmarktpolitik in unterschiedlichen Konjunkturphasen," WIFO Studies, WIFO, number 67250.
    3. Eva Jacob, 2023. "Revenu de Base Inconditionnel : de la théorie à la pratique," Working Papers of BETA 2023-06, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Tingyun Chen & Jean-Jacques Hallaert & Alexander Pitt & Haonan Qu & Maximilien Queyranne & Alaina Rhee & Anna Shabunina & Jérôme Vandenbussche & Irene Yackovlev, 2018. "Inequality and Poverty across Generations in the European Union," IMF Staff Discussion Notes 18/01, International Monetary Fund.

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