JOURNAL ARTICLE
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Sozialtransfer und Arbeitsangebot
Siebert, Horst | Stähler, Frank
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 115 (1995), Iss. 3 : pp. 377–392
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Siebert, Horst
Stähler, Frank
Abstract
This paper explores the impact of a changed transfer policy on labor supply. We assume that transfer policies are changed in that the implicit tax rate on labor income of transfer recipients is reduced from unity to a lower rate. The labor supply of former recipients is increased but the set of recipients may be enlarged as well. These new recipients decrease their labor supply. The total effect on labor supply is shown to be ambiguous if the break-even income which equalizes transfer- and purely labor-based income is increased. The paper demonstrates that the behavior of households who realized an old income in the close neighborhood of the new break-even income is crucial for the total effect. A simulation is provided in order to pronounce the potential effect on total labor supply.