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Title:Employment effects of welfare reforms: evidence from a dynamic structural life-cycle model PDF Logo
Authors:Haan, Peter
Prowse, Victoria
Uhlendorff, Arne
Issue Date:2008
Series/Report no.:IZA Discussion Papers 3480
Abstract:In this paper we develop a dynamic structural life-cycle model of labor supply behavior which fully accounts for the effect of income tax and transfers on labor supply incentives. Additionally, the model recognizes the demand side driven rationing risk that might prevent individuals from realizing their optimal labor supply state, resulting in involuntary unemployment. We use this framework to study the employment effects of transforming a traditional welfare state, as is currently in place in Germany, towards a more Anglo-American system in which a large proportion of transfers are paid to the working poor.
Subjects:Life-cycle labor supply
involuntary unemployment
in-work credits
JEL:J22
Persistent Identifier of the first edition:urn:nbn:de:101:1-2008052708
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
Publikationen von Forscherinnen und Forschern des DIW

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