Centrum Analiz Ekonomicznych

Working Paper 02/15

Making work pay: increasing labour supply of secondary earners in low income families with children in Poland.

Anna Kurowska, Michał Myck, Katharina Wrohlich

Abstract:

In-work support through the tax-benefit system has proved to be an effective way of increasing labour supply of lone mothers and first earners in couples in a number of OECD countries. At the same time these instruments usually create negative employment incentives for secondary earners. This in turn reduces the potential of in-work support to address the joint objectives of higher employment and lower poverty levels. In this paper we examine labour supply implications of a diverse set of possible reforms to the main elements of tax and benefit support of families with children in Poland. We show how an adequate combination of increased generosity of the tax and benefit system with the introduction of a “double earner” premium may result in increased labour supply of first and second earners in couples and concentrate the response in the lower half of the income distribution thus increasing the potential of in-work support to alleviate poverty.

Share this post