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In-work Benefits in Belgium: Effects on Labour Supply and Welfare
[journal article]
Abstract Belgium has implemented, following the example of other countries, in-work benefit policies since the early 2000’s, with the objective of increasing employment rates and fighting poverty. Belgian in-work benefits differ from most other in-work benefits as eligibility requires low hourly earnings. We... view more
Belgium has implemented, following the example of other countries, in-work benefit policies since the early 2000’s, with the objective of increasing employment rates and fighting poverty. Belgian in-work benefits differ from most other in-work benefits as eligibility requires low hourly earnings. We study the effects extensions of those benefits would have both on labour supply and welfare, using a random-utility - random-opportunity model estimated on cross-sectional SILC datasets. Results show that further increasing the benefits would slightly increase labour supply and welfare of low-to-middle income deciles, but at very high net cost per job created. We compare our results with existing research and explain some mechanisms that possibly led to an underestimation of negative intensive margin labour supply responses in previous simulations.... view less
Keywords
Belgium; labor supply; social benefits; gainful employment; achievement; combating poverty
Classification
Labor Market Research
Labor Market Policy
Free Keywords
in-work benefits; random utility model; discrete choice; microsimulation; Belgian database of the European Union Statistics on Income and Living Conditions (EU-SILC)
Document language
English
Publication Year
2021
Page/Pages
p. 43-72
Journal
International Journal of Microsimulation, 14 (2021) 1
DOI
https://doi.org/10.34196/ijm.00229
ISSN
1747-5864
Status
Published Version; peer reviewed