Labor supply responses to universal income support programs

Labor supply responses to universal income support programs

High transfer withdrawal rates are common among social security systems in developed countries around the world. These withdrawal rates of income support programs targeted to low-income earners create high effective marginal tax rates (EMTRs) and thus provide little incentive to increase working hours for recipients, potentially trapping recipients into benefit programs. This research project analyzes how low income earners respond to these high EMTRs. In particular, we would like to address the questions to what extent high EMTRs caused by universal income support programs provide a disincentive for recipients to earn more and to what extend high EMTRs trap recipients permanently into welfare. In addition, we would like to study the question of whether decreasing EMTRs could pay for itself.

Project members

Martin Streng

Martin Streng

Researcher und Graduate Study Coordinator

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Florian Buhlmann

Florian Buhlmann

Researcher

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