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Negative Einkommensteuer, Lohnsubventionen und Langzeitarbeitslosigkeit

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Article
The killer argument in the German Policy debate is the fiscal one: we cannot afford a universal basic income (UBI). Fiscal effects are calculated by applying standard microsimulation and general computable equilibrium models. While these empirical models are useful for ex-ante evaluations of marginal reforms, the introduction of a basic income scheme is a fundamental reform associated with behavioural responses that are only partially captured by standard empirical models. Therefore, the proposed randomised controlled trials using nudges will provide more insights into the German institutional setting.
Article
Ein bedingungsloses Grundeinkommen — von manchen auch als solidarisches Bürgergeld oder negative Einkommensteuer bezeichnet — würde eine gewaltige Umstrukturierung des deutschen Sozialstaates mit sich bringen. Die Befürworter der unterschiedlichen Vorschläge eines bedingungslosen Grundeinkommens postulieren zwar zahlreiche positive Auswirkungen. Eine genauere Analyse lässt diesbezüglich allerdings erhebliche Zweifel aufkommen. In diesem Beitrag wird dargelegt, dass ein bedingungsloses Grundeinkommen sowohl aus grundsätzlichen Überlegungen wie auch im Hinblick auf praktische Umsetzungsprobleme nicht überzeugen kann. Neben ordnungspolitischen Einwänden sind es vor allem die langfristigen Wirkungen auf den Arbeitsmarkt und ungelöste Finanzierungsfragen, die ein Scheitern der unterschiedlichen Grundeinkommensvorschläge erwarten lassen.
Chapter
Während die Sozialhilfe einen Schutz gegen sämtliche Lebensrisiken bietet und damit einen Eckpfeiler des sozialen Sicherungs system s darstellt, schützt die Arbeitslosenversicherung vor den finanziellen Folgen des spezifischen Risikos, als Arbeitnehmer beschäftigungslos zu sein. Dasselbe Risiko wird auch durch die Arbeitslosenhilfe abgesichert, die freilich keine Versicherung im engeren Sinn ist, weil sie durch Steuern finanziert und nur bei Bedürftigkeit gezahlt wird. Tatsächlich besteht zwischen allen drei genannten Teilsystemen ein enger Zusammenhang, weil die Sozialhilfe ebenfalls vor den materiellen Folgen der Beschäftigungslos lgkeit schützt, sofern der Betroffene keine Lohnersatzleistun- gen — im wesentlichen Arbeitslosengeld und Arbeitslosenhilfe — erhält oder diese zur Bestreitung des Lebensunterhalts nicht ausreichen. Daher liegt es nahe, Sozialhilfe und Lohnersatzleistungen gemeinsam zu erörtern.
Chapter
Seit 30 Jahren veranlasst die Arbeitslosigkeit Politik und Gesellschaft zu intensiven Debatten, seit 30 Jahren wird ein nicht unbeträchtlicher Teil des Bruttoinlandsprodukts (BIP) der Bundesrepublik (derzeit etwa 50 Milliarden Euro beziehungsweise 2,5 Prozent des BIP pro Jahr, siehe OECD 2004a) für Arbeitsmarktpolitik aufgewendet, seit 30 Jahren geschieht dies ohne Erfolg. Im Gegenteil: Die Zahl der Arbeitslosen und die Arbeitslosenquote haben sich etwa alle zehn Jahre schubweise erhöht und sind auf dem jeweiligen Niveau bis zum nächsten Schub mehr oder weniger stabil verharrt — zuletzt, im Frühjahr 2005 (nach Änderung der Zählweise) bei über fünf Millionen registrierten Arbeitslosen oder etwa 12,5 Prozent der Erwerbspersonen.2 Nimmt man noch die sogenannte Stille Reserve hinzu — dazu rechnet man einerseits Personen, die eigentlich erwerbstätig sein möchten, jedoch die Suche nach einem Arbeitsplatz wegen (ver meintlicher oder tatsächlicher) Erfolglosigkeit aufgegeben haben, andererseits Personen, die nicht als arbeitslos gezählt werden, weil sie an Maßnahmen der Arbeitsmarktpolitik teilnehmen — so ergibt sich ein Beschäftigungsdefizit in der Größenordnung von sechs bis sieben Millionen.
Article
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The aim of this paper is to analyse the role of unobserved heterogeneity in structural discrete choice models of labour supply for the evaluation of tax-reforms. Within this framework, unobserved heterogeneity has been estimated either parametrically or nonparametrically through random co- efficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. Given the relative big set of pa- rameters that enter in labour supply models, many researchers have to reduce the role of unobserved heterogeneity by specifying only a small set of random coefficients. However, this simplification affects the estimated labour supply elasticities, which then might hardly change when unob- served heterogeneity is considered in the model. In this paper, we present a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities do change significantly when the full set of coefficients is assumed to be random. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and post-reform income distribution do change signifi- cantly when unobserved heterogeneity is fully considered.
Article
Full-text available
The aim of this paper is to analyse the role of unobserved heterogeneity in structural discrete choice models of labour supply for the evaluation of tax-reforms. Within this framework, unobserved heterogeneity has been estimated either parametrically or nonparametrically through random co- efficient models. Nevertheless, the estimation of such models by means of standard, gradient-based methods is often difficult, in particular if the number of random parameters is high. Given the relative big set of pa- rameters that enter in labour supply models, many researchers have to reduce the role of unobserved heterogeneity by specifying only a small set of random coefficients. However, this simplification affects the estimated labour supply elasticities, which then might hardly change when unob- served heterogeneity is considered in the model. In this paper, we present a new estimation method based on an EM algorithm that allows us to fully consider the effect of unobserved heterogeneity nonparametrically. Results show that labour supply elasticities do change significantly when the full set of coefficients is assumed to be random. Moreover, we analyse the behavioural effects of the introduction of a working-tax credit scheme in the Italian tax-benefit system and show that the magnitude of labour supply reactions and post-reform income distribution do change signifi- cantly when unobserved heterogeneity is fully considered.
Article
Lohnsubventionen werden als eine relativ flexible und effiziente Methode gesehen, um die Nachfrage nach gering qualifizierten Arbeitnehmern zu erhöhen und ihre Einkommens- und Beschäftigungschancen zu verbessern. Auch in Deutschland gewinnt die Förderung durch dieses Instrument aktiver Arbeitsmarktpolitik einerseits zunehmend an Bedeutung, wird andererseits aber auch kritisiert. Neben dem aus humankapitaltheoretischer Sicht fehlenden Weiterbildungsaspekt steht vor allem das Auftreten von Mitnahme-, Substitutions- und Verdrängungseffekten im Mittelpunkt der Kritik. Diese Effekte konterkarieren die erhoffte positive Wirkung von Lohnsubventionen und sind in der Regel schwer zu messen. Wir skizzieren in diesem Papier eine dreistufige Evaluierungsstrategie, bei der zunächst auf mikroökonomischer Ebene die Wirkung der Subvention auf den geförderten Arbeitnehmer untersucht wird. Anschließend steht die Arbeitsnachfrage im Vordergrund des Interesses, um Mitnahme- und Substitutionseffekte innerhalb eines Unternehmens zu ermitteln, bevor die Effekte auf gesamtwirtschaftlicher Ebene analysiert werden sollen. Die umfassende empirische Evaluation von Lohnsubventionen in Deutschland steht noch aus, da die dafür notwendigen Daten noch nicht zur Verfügung stehen. Sobald dies der Fall ist, kann eine Bewertung auf den drei angesprochenen Ebenen erfolgen.
Article
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The Dutch economy shows that capitalism with a friendly face can work. Job growth has been spurred by an investment and export boom and a move towards more labour intensive methods of production. The combination of anchoring the guilder to the D-mark and a policy of sustained wage moderation has been the motor for the job growth. It has led to a boost in profits and competitiveness and held back labour productivity. Wage moderation, a strong currency and social cohesion do not come like manna from heaven. They require consensus, trust and corporatism as well as tax cuts, training and child care programmes to support it. The challenge for the Dutch is to boost labour market participation, particularly of older workers and partially handicapped. This requires specific tax incentives as well as further reform of social security.
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* Abstract - This paper examines the impact of marginal tax rates, which incorporate the earned income tax credit (EITC) as it existed in 1988, on the reporting of income by low-income taxpayers. We generally find that misreported income is not affected by tax rates, except for proprietors. Negative marginal tax rates, which occur in the phase-in range of the EITC, do not appear to affect the amount of income overreported, irrespective of the source of income. Furthermore, the amount of income underreported does not appear to be affected by the relatively high marginal tax rates which occur in the phase-out range, except for proprietors. Even in the case of proprietors, the effect on the understatement of income is modest.
Article
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Normative arguments for restricting redistribution to cash transfers or a negative income tax have not appealed to politicians or their constituents. All modern governments redistribute income in kind and provide goods and services that can be produced and distributed privately. At times public and private supply coexist. Housing services, medical care, and education are examples, but so too are safety and many regulatory activities of government.
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It is often argued that institutional factors constrain the labour supply choices open to the individual. In this paper we present an alternative to the standard neoclassical model of labour supply under the presumption that the number of hours choices are discrete and finite. We explore alternative specifications of discrete models of labour supply which are appropriate for the microsimulation of the behavioural impact of tax policy reform. Policy simulations are carried out for a basic income reform.
Article
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Between 1968 and 1982, the United States federal government sponsored four negative income tax experiments. This paper provides a set of consensus estimates of the labor supply responses to these experiments. It is found that despite the wide range of treatments and evaluation methodologies, the results are remarkably consistent. On average, husbands reduced labor supply by about the equivalent of two weeks of full-time employment. Wives and single female heads reduced labor supply by about the equivalent of three weeks of full-time employment. Youth reduced labor supply by about the equivalent of four weeks of full-time employment. Estimated income and substitution effects are quite similar to those obtained from nonexperimental studies.
Chapter
There is substantial disagreement among policy-makers about how governments should respond to the problem of high unemployment. Thus far there has been little, if any, systematic attempt to evaluate the strengths and weaknesses of the main unemployment policies available to governments in market economies. Individual policy recommendations are usually made in isolation from one another. This book attempts to provide a balanced assessment of the various policy options, including the following: demand management versus supply-side policy, subsidizing employment and training, restructuring labour market regulations, and reforming the welfare state. The book also examines the political economy of unemployment policy and the effect of this policy on productivity growth.
Article
Recipients of public assistance and unemployment benefits face an effective marginal tax rate of (almost) 100%, since these payments decline in a ratio of one by one when own income is earned. The metaphor of an “unemployment trap” describes this labour supply disincentive quite accurately. A negative income tax could overcome this problem, but is considered to be too expensive and to entail some flaws from an allocative point of view. Starting from this critique, we propose a “Targeted Negative Income Tax”, which basically confines the negative income tax to the group of the long-term unemployed. This targeting ensures that the incentives are given to those who need them most, and avoids the massive fiscal burden associated with a general introduction of a negative income tax. The fiscal burden may even be reduced with each long-term unemployed person who is drawn back into the labour market. In this paper, we compare this proposal to some alternative measures created to provide work incentives such as the “Family Credit” and the “Earned Income Tax Credit” introduced in the UK and the US, respectively.
Article
Three subsidy schemes for income maintenance are analyzed for their static incentive effects on labor supply. A discussion and critique of regressivity in schemes such as the "income-work" subsidy is offered. The dynamic incentive effects, the costs and benefits, and the redistributive patterns of the schemes are treated with political and social as well as economic considerations. Special attention is devoted to the analysis of a wage subsidy, which has been neglected in the literature on maintenance. The new labor supply is derived for a wage subsidy, and the effect of the wage subsidy in "guaranteeing jobs" and an analogy to the employer subsidy are described. An attempt is made to exploit the static incentive advantages of the wage subsidy over the two income subsidies treated here. The workability of categorical and "self-categorizing" combined wage-and-income subsidy programs is opened for further research.
Article
It has to be explained why the expenditures of the state for social activities are growing fast in highly developed democratic countries. Two questions are asked: (1) Have allocative and distributional market failures in the sector of social politics been the causes for this development? (2) Are deficiencies in the process of political coordination in democratic states the reason for the often inefficient activities of the state in the field of social politics? The analysis shows that allocative market failures aren't sound, distributional market failures are unimportant, and the desire in highly developed economies to a more just distribution of income and wealth diminishes. The reason why social expenditures of the state are too high and often inefficient primary lies in inefficient democratic mechanisms of modern states.
Article
The paper explores the employment implications of allowing people the opportunity of using a portion of their incapacity benefits to provide employment vouchers for employers that hire them. The analysis indicates that introducing this policy could increase employment, raise the incomes of incapacity benefit recipients, and reduce employers' labor costs.
Article
Wisconsin is commonly cited as exemplar of the capability of states for reforming welfare. Wisconsin's welfare and caseload declined 22.5 percent between 1986 and 1994. I argue that the decline resulted from restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utilization by means other than denying access are jeopardized by proposed changes in federal cost-sharing, a prospective state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. Wisconsin Works, the state's plan for public assistance in a post-block grant world, continues benefit reduction and eligibility restriction but expands emphasis on employment. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere.
Article
Using data from the Michigan Panel Study of Income Dynamics, this article estimates the impact of the Earned Income Tax Credit (EITC) on economic risk. Risk is measured through the variance of full income (income holding labor supply constant). The results show that the EITC significantly reduces economic risk, but its effects are weaker dollar for dollar than traditional means-tested programs like Food Stamps. The difference is not statistically significant, however. Moreover, for many middle-class people, the risk-reduction benefits of the EITC exceed the tax burden it imposes. This is less true of means-tested transfers. These results are significant for the politics of antipoverty policy. They show that a real-world antipoverty program can generate enough middle-class economic security to build for itself a solid base of political support.
Article
The Targeted Jobs Tax Credit (TJTC) is a representative redistributive incentive. Initially, proponents saw TJTC as an elegant program, efficiently promoting labor market behavior that would solve the employment problems of many disadvantaged job seekers. However, interest groups distorted the credit into a windfall for businesses that hire large numbers of low wage workers. The policy theories incorporated into TJTC, which emphasized continual program reform and minimized program management by public administrators, provided a setting conducive to interest group distortion. Because few representatives of the disadvantaged participated in the oversight process, special interests undermined TJTC being reformed through empirical evaluation. This experience indicates that without major changes in the policy process, narrowly targeted rzdistributive policies should be avoided.
Book
Globalization is exposing social fissures between those with the education, skills, and mobility to flourish in an unfettered world market--the apparent "winners"--and those without. These apparent "losers" are increasingly anxious about their standards of living and their precarious place in an integrated world economy. The result is severe tension between the market and broad sectors of society, with governments caught in the middle. Compounding the very real problems that need to be addressed by all involved, the kneejerk rhetoric of both sides threatens to crowd out rational debate. From the United States to Europe to Asia, positions are hardening. Author Dani Rodrik brings a clear and reasoned voice to these questions.Has Globalization Gone Too Far? takes an unblinking and objective look at the benefits--and risks--of international economic integration, and criticizes mainstream economists for downplaying its dangers. It also makes a unique and persuasive case that the "winners" have as much at stake from the possible consequences of social instability as the "losers." As Rodrik points out, ". . . social disintegration is not a spectator sport--those on the sidelines also get splashed with mud from the field. Ultimately, the deepening of social fissures can harm all." President Clinton read the book and it provided the conceptual basis for the trade/IMF portions of his State of the Union message in January 1998. * Globalization is "the next great foreign policy debate," Thomas Friedman of the New York Times wrote, and he found Has Globalization Gone Too Far? "provocative" on the subject. This book provides a critical definition--and welcome clarity--to that debate.
Article
One of the outstanding results of three decades of laboratory market research is that under rather weak conditions prices and quantities in competitive experimental markets converge to the competitive equilibrium. Yet, the design of these experiments ruled out gift exchange or reciprocity motives, that is, subjects could not reciprocate for a gift. This paper reports the results of experiments which do not rule out reciprocal interactions between buyers and sellers. Sellers have the opportunity to choose quality levels which are above the levels enforceable by buyers. In principle they can, therefore, reward buyers who offer them high prices. Yet, such reciprocating behaviour lowers sellers' monetary payoff and is, hence, not subgame perfect. The data reveal that many sellers behave reciprocally. This generates a positive relation between prices and quality at the aggregate level which is anticipated by the buyers. As a result, buyers are willing to pay prices which are substantially above sellers' reservation prices. These results indicate that reciprocity motives may indeed be capable of driving a competitive experimental market permanently away from the competitive outcome. The data, therefore, support the gift exchange approach to the explanation of involuntary unemployment.
Article
This paper examines the impact of the potential duration of unemployment insurance (UI) benefits on unemployment in the United States. First, we use a large sample of household heads to examine differences in the unemployment spell distributions of UI recipients and nonrecipients. Sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for UI recipients around the time of benefits exhaustion. Such increases are not apparent at similar points of spell duration for nonrecipients. Second, our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of UI recipients by 0.16 to 0.20 weeks.
Article
We study a number of mechanisms through which the economy can be stuck at a high unemployment equilibrium because a poor labour market is associated with support for a poor policy. These mechanisms are consistent with the relative scarcity of measures that have been undertaken to cure unemployment. The message of the paper is that curing the European unemployment problem is a difficult task because a lot of skill is required to avoid political pitfalls.
Article
In a model where all factors of production are imperfectly mobile, we argue that the Dixit-Norman scheme of commodity taxes may not lead to strict Pareto gains from trade. Rather, this scheme must be augmented by policies that give factors an incentive to move between industries: hence, the role for trade adjustment assistance. By offering an adjustment subsidy to all individuals wiling to move, and also using the Dixit-Norman pattern of commodity taxes, the government can implement Pareto gains from trade under the condition we identify.
Article
We use data from the German Socio-Economic Panel to investigate how individual happiness is affected by unemployment. Unemployment has a large and negative effect even after controlling for individual specific fixed effects. Nonparticipation, in contrast, is much less harmful to happiness. Further, we decompose the total well-being costs of unemployment and find that well above three quarters are non-pecuniary, and below one quarter pecuniary. One implication is that income support programs for the unemployed do very little at mitigating the adverse effects of unemployment, and such transfers are unlikely to generate unemployment.
Article
Collateral impacts of LULUCF projects, especially those concerning social and environmental aspects, have been recognised as important by the Marrakech Accords. The same applies to the necessity of assessing and, if possible, of quantifying the magnitude of these impacts. This article aims to define, clarify and structure the relevant social, economic and environmental issues to be addressed and to give examples of indicators that ought to be included in the planning, design, implementation, monitoring, and ex post evaluation of LULUCF projects. This is being done by providing a conceptual framework for the assessment of the sustainability of such projects that can be used as a checklist when dealing with concrete projects, and that in principle is applicable to both Annex I and non-Annex I countries. Finally, a set of recommendations is provided to further develop and promote the proposed framework.
Article
An important feature of the European unemployment problem is the disincentive to supply labour for low-productivity workers due to generous levels of non-labour income in conjunction with marginal effective tax rates of around 100% for low levels of income (poverty trap). Targeted employment subsidies are proposed to overcome this problem. Snower (1994, 1997) suggests a targeted employer subsidy scheme called "Benefit Transfer Programme (BTP)". Jerger/Spermann (1997) suggest a targeted employee subsidy scheme called "Targeted Negative Income Tax (TNIT)". Both proposals solve the poverty trap problem for a limited time period without additional fiscal costs. In this paper, the employment effects of BTP and TNIT are compared in an extended model of equilibrium unemployment. It turns out that TNIT may in practice be associated with higher employment effects than BTP due to the role of transaction costs and asymmetric information.
Article
Gegenwärtig wird eine Abschaffung bzw. Einschränkung der 620-DM-Beschäftigungsverhältnisse diskutiert. Dr. Clemens Fuest und Professor Bernd Huber analysieren die möglichen Auswirkungen für den Arbeitsmarkt und das Sozialsystem und schlagen alternativ eine beschäftigungsfreundliche Reform dieser Beschäftigungsverhältnisse vor. --
Article
Although explanations of the persistence of high unemployment in Germany, in particular long-term unemployment, have increasingly focused on structural factors, there is only very limited evidence on their empirical importance so far. In this paper, these factors are analyzed based on a microeconometric model of individual transitions from unemployment into employment and non-participation for the West German labour market. The empirical analysis is based on waves 1 - 9 of the Socio-Economic Panel for West Germany covering the period 1983 to 1992. The focus of the study is on the importance of 'negative duration dependence' arising from causal factors and 'sorting' effects due to unobserved heterogeneity in the unemployment pool. I also sort out the relative contribution of various factors, such as individual characteristics, the state of the labour market, and the effects of unemployment benefits on long-term unemployment.