Subsidies on low-skilled workers’ social security contributions: the case of Belgium

Dagsvik, John K.; Jia, Zhiyang; Orsini, Kristian; Camp, Guy Van

doi:10.1007/s00181-010-0367-6

Cited by 19 publications

(16 citation statements)

References 20 publications

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“…Moreover, our subsample includes some households with more than two adults, which mainly includes adult children living with their parents. We exclude these young adults from the estimation as it is unclear how their consumption and utility are determined (Dagsvik et al, 2011).…”

Section: Datamentioning

confidence: 99%

Structural Labor Supply Models and Wage Exogeneity

Löffler¹,

Peichl

Siegloch

2014

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract. There is still considerable dispute about the magnitude of labor supply elasticities. While differences in micro and macro estimates are recently attributed to frictions and adjustment costs, we show that relatively low labor supply elasticities derived from microeconometric models can also be explained by modeling assumptions with respect to wages. Specifically, we estimate 3,456 structural labor supply models each representing a plausible combination of frequently made choices. While most model assumptions do not systematically affect labor supply elasticities, our analysis shows that the results are very sensitive to the treatment of wages. In particular, the often-made but highly restrictive independence assumption between preferences and wages is key. To overcome this restriction, we propose a flexible estimation strategy that nests commonly used models. We show that loosening the exogeneity assumption leads to labor supply elasticities that are much higher. Structural Labor SupplyJEL Classification: C25, C52, H31, J22

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Section: Datamentioning

confidence: 99%

Structural Labor Supply Models and Wage Exogeneity

Löffler¹,

Peichl

Siegloch

2014

SSRN Journal

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“…If eligibility depends on earned income, one might have incentives to reduce labour supply in order to obtain the tax credit or to work less for the same income. As discussed in Dagsvik et al (2011), an instrument where eligibility is related to the individuals earning capacity does not create these negative labour supply responses. Hence, this might serve as a recommendation to policy makers to carefully take these potential labour supply reactions into account.…”

Section: Resultsmentioning

confidence: 99%

“…their full time equivalent earnings, these negative labour supply responses at the intensive margin can be avoided. Orsini (2006) and Dagsvik et al (2011) show that the implementation of the Workbonus in Belgium does not suffer from these negative responses as eligibility depends on worker's productivity. 11 In this example, the loss in social assistance cannot be completely balanced by the gain in income from work.…”

Section: Effect On the Budgetconstraint And Labour Supplymentioning

confidence: 99%

In-Work Tax Credits in Belgium: An Analysis of the Jobkorting Using a Discrete Labour Supply Model

Vanleenhove

2011

SSRN Journal

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ABSRACT:The Flemish government implemented in 2007 an in-work tax credit in order to increase the employment rate and to make working financially more attractive. This paper investigates how total labour supply changes and checks if the cost reductions due to these behavioral reactions are large enough to defend such expensive policies. It appears that married women alter their labour supply decision the most. However, due to the small tax credit, total labour supply effects are of minor size and hardly offset the large costs. Only a more generous tax credit leads to a higher activations of inactive people, however the budgetary cost is huge.JEL CLASSIFICATION: H31, J22, C25.

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“…We shall now review essential features of our maintained job choice model. A more rigorous exposition and further details are found in Dagsvik and Strøm () and Dagsvik and Jia () . As mentioned in the introduction, this model departs in an essential way from previous approaches in that we focus on a more comprehensive description of the choice environment in which job choice is the fundamental decision variable.…”

Section: The Job Choice Modelmentioning

confidence: 99%

Theoretical and Practical Arguments for Modeling Labor Supply as a Choice Among Latent Jobs

Dagsvik

Jia

Kornstad

et al. 2013

Journal of Economic Surveys

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than the standard approaches based on marginal calculus. In this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory. This theory also offers a powerful framework for developing a more realistic model for labor supply choices, founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work. We discuss and clarify how this modeling framework deviates from both the conventional discrete approach (Van Soest, 1995), as well as the standard textbook approach based on marginal calculus (Hausman, 1985). It is argued that a model based on job choice opens up for a more realistic representation of the choice environment, and consequently offers the possibility of conducting a richer set of simulations of alternative policies. Terms of use: Documents inJEL-Code: C510, J220, H240.

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Subsidies on low-skilled workers’ social security contributions: the case of Belgium

Abstract: Tax and benefit systems, Microsimulation, Labor supply, Structural modeling, H21, H24, H31, J22,

Cited by 19 publications

References 20 publications

Structural Labor Supply Models and Wage Exogeneity

Structural Labor Supply Models and Wage Exogeneity

In-Work Tax Credits in Belgium: An Analysis of the Jobkorting Using a Discrete Labour Supply Model

Theoretical and Practical Arguments for Modeling Labor Supply as a Choice Among Latent Jobs

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