Beans for breakfast? How exportable is the British workfare model?

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Title: Beans for breakfast? How exportable is the British workfare model?
Authors: Orsini, Kristian
Bargain, Olivier
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Date: 2006
Abstract: Social assistance and inactivity traps have long been considered as one of the main causes of the poor employment performance of EU countries. The success of New Labour in the UK has triggered a growing interests in instruments capable of combining the promotion of responsibility and self-sufficiency with solidarity with less skilled workers. Making-work-pay (MWP) policies, consisting of transfers to households with low earning capacity, have quickly emerged as the most politically acceptable instruments in tax-benefit reforms of many Anglo-Saxon countries. This chapter explores the impact of introducing the British Working Families’ Tax Credit (WFTC) in three EU countries with rather different labor market and welfare institutions: Finland, France and Germany. Simulating the reform reveals that, while first-round effects on income distribution is considerable, the interaction of the new instrument with the structural characteristics of the economy and the population may lead to counterproductive second round effects (i.e. changes in economic behavior). The implementation of the reform, in this case, could only be justified if the social inclusion (i.e. transition into activity) of some specific household types (singles and single mothers) is valued more than a rise in the employment per se.
Type of material: Journal Article
Publisher: Emerald
Copyright (published version): Copyright 2007 Elsevier
Keywords: Micro-Simulation in ActionPolicy Analysis in Europe using EUROMOD
Subject LCSH: Taxation--Europe
Labor supply--Europe
Employment subsidies--Great Britain
DOI: 10.1016/S0147-9121(06)25007-6
Language: en
Status of Item: Not peer reviewed
Is part of: Bargain, Olivier (ed.). Research in Labor Economics, volume 25.
Appears in Collections:Geary Institute Research Collection
Economics Research Collection

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