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In-Work Transfers in Good Times and Bad: Simulations for Ireland

  • Bargain, Olivier

    ()

    (University of Aix-Marseille II)

  • Doorley, Karina

    ()

    (LISER (CEPS/INSTEAD))

In-work transfers are often seen as a good trade-off between redistribution and efficiency, as they alleviate poverty among low-wage households while increasing financial incentives to work. The present study explores the consequences of extending these transfers in Ireland, where support for low-wage households has been of limited scope. The employment and poverty effects of alternative policies are analyzed thanks to counterfactual simulations built using a micro-simulation model, the Living in Ireland Survey 2001 and labour supply estimations. Firstly, we study the effect of recent extensions of the existing scheme, the Family Income Supplement (FIS), and of its replacement by the refundable tax credit in force in the UK. Secondly, little is known about the impact of macro-level changes on the distribution of resources at the household level, which is particularly relevant in a country deeply affected by the current economic downturn. We suggest a preliminary analysis of the capacity of alternative in-work transfer scenarios to cushion the negative impact of earnings losses and cuts in the minimum wage.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4644.

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Length: 37 pages
Date of creation: Dec 2009
Date of revision:
Publication status: published in: Solomon W. Polachek, Konstantinos Tatsiramos (eds.), 2011, Research in Labor Economics (Research in Labor Economics, Volume 33), Emerald Group Publishing Limited, 307-339
Handle: RePEc:iza:izadps:dp4644
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  1. Elena Stancanelli, 2007. "Evaluating the Impact of the French tax credit on the employment rate of women," Sciences Po publications N°2007-33, Sciences Po.
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  12. Olivier Bargain & Kristian Orsini, 2004. "In-work policies in Europe: killing two birds with one stone?," DELTA Working Papers 2004-13, DELTA (Ecole normale supérieure).
  13. Andrea Bassanini & Jørn Henrik Rasmussen & Stefano Scarpetta, 1999. "The Economic Effects of Employment-Conditional Income Support Schemes for the Low-Paid: An Illustration from a CGE Model Applied to Four OECD Countries," OECD Economics Department Working Papers 224, OECD Publishing.
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