Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33538
Authors: 
Bargain, Olivier
Caliendo, Marco
Haan, Peter
Orsini, Kristian
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers 2033
Abstract: 
We assess the labour supply effects of two 'making work pay' reforms in Germany. We provide evidence in favour of policies that distinguish between low effort and low productivity by targeting individuals with low wages rather than individuals with low earnings. In assessing the policies we account for demand-side constraints by using a double-hurdle model. We identify and decompose the potential bias of labour supply elasticities derived in standard unconstrained models. Although this bias is not significant when assessing policies which mainly target voluntarily unemployed workers (typically secondary earners), it is substantial for policies which affect groups with high shares of involuntary unemployment.
Subjects: 
tax-benefit systems
microsimulation
household labour supply
multinomial logit
involuntary unemployment
double-hurdle
JEL: 
C25
C52
H31
J22
Document Type: 
Working Paper

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