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Safety net still in transition: labour market incentive effects of extending social support in Poland
Many aspects of the economic transition which started in 1989 in Poland are by now complete. However, the route Polish governments have so far taken concerning the system of support for low-income families still implies very different poverty alleviation schemes compared to those found in many developed countries. We examine the Polish system of social assistance in a comparative context with Germany and focus on its implications for financial incentives to work. The paper shows the effect of extending the financial support system for poorest families in Poland on labour market incentives. We demonstrate that assumptions concerning sharing of resources among families within households have significant implications on the resulting financial incentives and importantly change the implied consequences of the reforms. This is the case especially for single-adult families. 74\% of single adults without children, and 53\% of lone parents in Poland live in multi-family households. Given the limited role of the state in providing a means-tested safety net, these multi-family arrangements play an important role as far as alleviating poverty is concerned, but they are also significant for incentives on the labour market.
Psychological and social well-being of Poles aged 50+ compared to selected European societies
As SIMPL as that: Introducing a Tax-Benefit Microsimulation model for Poland
The Polish tax and benefit system is presented in the context of a recently developed microsimulation model, SIMPL. The model allows simulating direct taxes, social contributions and public benefits in Poland for the years 2003 and 2005. It is based on the Household Budgets Survey data (Badania Budżetów Gospodarstw Domowych) from 2003 and 2005. The document describes details of the Polish tax and benefit system and the simulation assumptions which were necessary in modelling it in SIMPL. We provide information on the quality of the data used in the model and some details of the validation process through various robustness checks. Finally we provide examples of application of the model for analysis of effects of policy reforms.
Tax-benefit microsimulation model for Poland – SIMPL2003
Microsimulation model (SIMPL03) uses data from the households budget sample surveys in connection with programmed tax-benefit system to calculate theoretical and hypothetical incomes. Information contained in data on households incomes usually enable calculation only total “real” income. Microsimulation models with calculated “theoretical” and “hypothetical” incomes enable inter alia estimation of changes in households incomes caused by made or planned reforms of tax-benefit instruments. In the article tax-benefit model for Poland using data obtained from the households budget survey 2003 was presented and the model quality trough the comparison of simulation results with the available administrative data was evaluated. Presented model quality evaluation shows that SIMPL model is not far different from other European tax–benefit models as far as quality results are concerned. It also creates the possibility to conduct surveys on financial motivation influence on decision on the labour market.
Taxes, Benefits and Financial Incentives to Work. The United Kingdom, Germany and Poland Compared
We provide a detailed comparison of financial incentives to work resulting from the tax and benefit systems in three countries: the United Kingdom, Germany and Poland. Financial incentives to work are compared using a range of example family profiles under different assumptions concerning benefit eligibility, wage levels and work intensity. Consequences of the different design of taxes and benefits are discussed in detail from the perspective of attractiveness of employment.
Employment Fluctuations and Dynamics of the Aggregate Average Wage in Poland 1996-2003
The aggregate average wage is often used as an indicator of economic performance and welfare, and as such often serves as a benchmark for changes in the generosity of public transfers and for wage negotiations. Yet if economies experience a high degree of (non‐random) fluctuation in employment, the composition of the employed population will have a considerable effect on the computed average. In this paper we demonstrate the extent of this problem using data for Poland for the period 1996–2003. During these years the employment rate in Poland fell from 51.2 percent to 44.2 percent and most of this fall occurred between the end of 1998 and the end of 2002. We show that about a quarter of the growth in the average wage during this period could be attributed purely to changes in employment.
Wages and Ageing: Is There Evidence for the Inverse-U Profile?
How individual wages change with time is one of the crucial determinants of labour market decisions including the timing of retirement. The focus of this paper is the relationship between age and wages with special attention given to individuals nearing retirement. The analysis is presented in a comparative context for Britain and Germany looking at two longitudinal data sets (BHPS and SOEP, respectively) for the years 1995-2004. We show the importance of cohort effects and selection out of employment which determine the downward-sloping part of the ‘inverse-U’ profile observed in cross-sections. There is little evidence that wages fall with age.
Apply with caution: introducing UK-style in-work support in Germany
Estimates of the labour supply effects of recent UK reforms in the area of direct taxes and benefits show that policy can have significant influence on the level of employment. We confirm this in a simulation of an in‐work support system introduced into the German tax and benefit system. Our simulation results suggest that introducing in‐work tax credits in Germany would increase the employment of single individuals by over 105,000 but would result in a reduction of labour supply among individuals living in couples by about 70,000, among both women and men. The result found for men is especially important as it is markedly different from all results for the UK, where the net response among men has always been found to be positive. Our estimation results call for a high degree of caution as far as ‘importing’ UK‐style tax credits to Germany is concerned. In‐work support based on family income would reinforce the existing work disincentives for secondary earners, reducing the employment levels of both men and women living in couples.