Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34060 
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers No. 2399
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
In the debate on in-work benefits in Germany it is often overlooked that such subsidies may only be effective if basic minimum income is remarkably decreased for those who are employable. However, proposals following this principle will hardly achieve political consensus as can be derived from reactions to the model of ifo or the board of economic advisors. IZA is therefore proposing workfare as an effective alternative, which may accomplish a strong incentive for the acceptance of low paid jobs without having to cut the current welfare level. Simulations based on a micro-econometric labor supply model show that this could add to the workforce an additional number of 800,000 workers. Roughly the same effect could be achieved by the ifo model, however, at the expense of massive cuts of disposable income for welfare recipients. Hence, workfare turns out as an efficient alternative. Moreover, there is no useful combination between in-work benefits based on the current welfare level and workfare.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
111.66 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.