Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia

Saša Ranđelović, Marko Vladisavljević, S Vujić, Jelena Žarković‐Rakić

Research output: Working paper

Abstract

The labour force participation rate of the working age population in Serbia in 2012 stood at 64%, while the inactivity rate was considerably above the EU average. There are several studies arguing that high inactivity rates are mostly due to the design of the tax and the benefit system. Our paper provides ex‐ante evaluation of the impact of in‐work benefit schemes in Serbia on labour supply and income distribution. In‐work benefits are meanstested transfers given to individuals conditional on their employment status. For the purpose of this analysis we combine the tax and benefit micro‐simulation model for Serbia with a structural discrete choice labour supply model. We simulate two in‐work benefit schemes: the first one is a means‐tested one on family income while the second one is a purely individualized policy. Our results show that the IWB assessed at the household level encourage the participation of single individuals, while benefit that is conditioned on individual earnings have greater incentive effects than the family‐based alternatives since they do not discourage the participation of second‐earners in a couple. Most of the behavioural changes take place among the poorest individuals with important redistributive effects.
LanguageEnglish
StatusUnpublished - Jun 2013

Fingerprint

Labor supply
Serbia
Tax
Participation
Behavioural change
Labor income
Employment status
Participation rate
Simulation model
Evaluation
Discrete choice
Family income
Incentive effect
Household
Income distribution
Microsimulation
Labor force participation
Redistributive effect

Keywords

  • in‐work benefits
  • labour supply
  • discrete choice
  • inequality
  • tax‐benefit
  • microsimulation

Cite this

Ranđelović, S., Vladisavljević, M., Vujić, S., & Žarković‐Rakić, J. (2013). Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia.

Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia. / Ranđelović, Saša ; Vladisavljević, Marko ; Vujić, S; Žarković‐Rakić, Jelena .

2013.

Research output: Working paper

Ranđelović, S, Vladisavljević, M, Vujić, S & Žarković‐Rakić, J 2013 'Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia'.
Ranđelović S, Vladisavljević M, Vujić S, Žarković‐Rakić J. Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia. 2013 Jun.
Ranđelović, Saša ; Vladisavljević, Marko ; Vujić, S ; Žarković‐Rakić, Jelena . / Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia. 2013.
@techreport{3bca1bce1d3c41e69c1b7ac9865f70d2,
title = "Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia",
abstract = "The labour force participation rate of the working age population in Serbia in 2012 stood at 64{\%}, while the inactivity rate was considerably above the EU average. There are several studies arguing that high inactivity rates are mostly due to the design of the tax and the benefit system. Our paper provides ex‐ante evaluation of the impact of in‐work benefit schemes in Serbia on labour supply and income distribution. In‐work benefits are meanstested transfers given to individuals conditional on their employment status. For the purpose of this analysis we combine the tax and benefit micro‐simulation model for Serbia with a structural discrete choice labour supply model. We simulate two in‐work benefit schemes: the first one is a means‐tested one on family income while the second one is a purely individualized policy. Our results show that the IWB assessed at the household level encourage the participation of single individuals, while benefit that is conditioned on individual earnings have greater incentive effects than the family‐based alternatives since they do not discourage the participation of second‐earners in a couple. Most of the behavioural changes take place among the poorest individuals with important redistributive effects.",
keywords = "in‐work benefits, labour supply, discrete choice, inequality, tax‐benefit, microsimulation",
author = "Saša Ranđelović and Marko Vladisavljević and S Vujić and Jelena Žarković‐Rakić",
year = "2013",
month = "6",
language = "English",
type = "WorkingPaper",

}

TY - UNPB

T1 - Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia

AU - Ranđelović,Saša

AU - Vladisavljević,Marko

AU - Vujić,S

AU - Žarković‐Rakić,Jelena

PY - 2013/6

Y1 - 2013/6

N2 - The labour force participation rate of the working age population in Serbia in 2012 stood at 64%, while the inactivity rate was considerably above the EU average. There are several studies arguing that high inactivity rates are mostly due to the design of the tax and the benefit system. Our paper provides ex‐ante evaluation of the impact of in‐work benefit schemes in Serbia on labour supply and income distribution. In‐work benefits are meanstested transfers given to individuals conditional on their employment status. For the purpose of this analysis we combine the tax and benefit micro‐simulation model for Serbia with a structural discrete choice labour supply model. We simulate two in‐work benefit schemes: the first one is a means‐tested one on family income while the second one is a purely individualized policy. Our results show that the IWB assessed at the household level encourage the participation of single individuals, while benefit that is conditioned on individual earnings have greater incentive effects than the family‐based alternatives since they do not discourage the participation of second‐earners in a couple. Most of the behavioural changes take place among the poorest individuals with important redistributive effects.

AB - The labour force participation rate of the working age population in Serbia in 2012 stood at 64%, while the inactivity rate was considerably above the EU average. There are several studies arguing that high inactivity rates are mostly due to the design of the tax and the benefit system. Our paper provides ex‐ante evaluation of the impact of in‐work benefit schemes in Serbia on labour supply and income distribution. In‐work benefits are meanstested transfers given to individuals conditional on their employment status. For the purpose of this analysis we combine the tax and benefit micro‐simulation model for Serbia with a structural discrete choice labour supply model. We simulate two in‐work benefit schemes: the first one is a means‐tested one on family income while the second one is a purely individualized policy. Our results show that the IWB assessed at the household level encourage the participation of single individuals, while benefit that is conditioned on individual earnings have greater incentive effects than the family‐based alternatives since they do not discourage the participation of second‐earners in a couple. Most of the behavioural changes take place among the poorest individuals with important redistributive effects.

KW - in‐work benefits

KW - labour supply

KW - discrete choice

KW - inequality

KW - tax‐benefit

KW - microsimulation

UR - http://iweb.cerge-ei.cz/pdf/gdn/RRCXII_27_paper_01.pdf

M3 - Working paper

BT - Labor Supply and Inequality Effects of In‐Work Benefits: Emiprical Evidence from Serbia

ER -