Tax-benefit systems, income distribution and work incentives
in the European Union

Jara, H. Xavier; Tumino, Alberto

doi:10.34196/ijm.00076

Cited by 45 publications

(53 citation statements)

References 23 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…As highlighted by Jara and Tumino (2013) for the case of marginal effective tax rates, some features of the tax-benefit system could lead to values of FTR outside the range of 0-100 per cent. An FTR above 100 per cent could be observed if, facing an earnings increase upon formalization, changes in household disposable income are negative, for instance due to the loss of an important benefit entitlement or to a burdensome tax.…”

Section: Measuring Financial Incentives To Formal Workmentioning

confidence: 99%

Financial disincentives to formal work: Evidence from Ecuador and Colombia

Jara¹,

Rodríguez²

2019

WIDER Working Paper

Self Cite

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.Abstract: The aim of this paper is to quantify the financial cost that informal workers would incur in the event of entering formality, accounting for potential earnings gains upon entry. To do so, we use representative microdata from Ecuador and Colombia, together with detailed tax-benefit models, and simulate transitions to formal employment for all workers observed in informality in the data, with informality defined as non-affiliation to social security. Our results point to strikingly high formalization costs in the two countries, with on average 52.8 and 78.5 per cent of workers' additional earnings taxed away due to social security payments in Ecuador and Colombia, respectively. Costs are particularly high for self-employed informal workers at the bottom of the earnings distribution. The results are mainly driven by the requirement that workers contribute to social security at least on the basis of the minimum wage in both countries.

show abstract

Section: Measuring Financial Incentives To Formal Workmentioning

confidence: 99%

Financial disincentives to formal work: Evidence from Ecuador and Colombia

Jara¹,

Rodríguez²

2019

WIDER Working Paper

Self Cite

View full text Add to dashboard Cite

show abstract

“…The main focus of Adam et al (2006) is how and why measures of financial work incentives in the UK changed between 1979 and the mid 2000s, but they also show how the distribution of financial work incentives (under the 2005 UK tax and welfare system) varies by family type. Adam and Browne (2010) Jara and Tumino (2013) -with earlier analysis in Immervoll and O'Donoghue (2002), Immervoll (2004) and Immervoll et al (2007) -who focus on the cross-country differences in the cross-sectional distribution of work incentives. The OECD's regular analysis is based on specimen families.…”

Section: Previous Literature Assessing How Taxes and Benefits Affect mentioning

confidence: 99%

How Taxes and Welfare Benefits Affect Work Incentives: A Life‐Cycle Perspective

Brewer

Shaw

2018

Fiscal Studies

View full text Add to dashboard Cite

Personal taxes and benefits affect the incentive to work over the life cycle by altering income–age profiles, insuring against adverse shocks and changing the returns to human capital. In this paper, we show how a life‐cycle perspective alters our impression of how the UK tax and benefit system affects women's work incentives. Given that actual longitudinal data conflate age effects, cohort effects and policy effects, and, in the UK, are not available covering the full life cycle, we use simulated data produced by a rich, dynamic structural model of female labour supply and human capital that incorporates family formation and fertility. We find that individuals experience considerable variability in work incentives across life that outweighs the variability across individuals. Changes in the presence of children and a partner, as well as the level of any partner's earnings, are key to explaining these patterns: work incentives vary dramatically depending on family composition and the earnings of any partner, especially for the lower‐skilled, and most women experience a number of different family types during the course of their lives.

show abstract

“…We follow Jara and Tumino (2013) and calculate METR as follows. First, household disposable income is calculated for each household in the survey.…”

Section: Top Income Adjustments and Ex-ante Evaluation Of Tax Reformsmentioning

confidence: 99%