Kiel Working Papers, Kiel Institute for World Economics
No 1237:
Incentives to Work: The Case of Germany
Alfred Boss and Thomas Elendner
Abstract: Based on a description of the German system of taxes and
transfers, the incentives to work are analyzed for several groups of the
labor force. The effects of the “Hartz IV” reform (effective from 2005
onwards) on the incentives receive particular attention. It turns out that
the marginal (explicit and implicit) tax rates for most groups of the labor
force remain high. It is concluded that employment probably will not be
affected significantly by that part of the reform which aims at
strengthening the incentives to work. Other elements of “Hartz IV” are only
touched on.
Keywords: Income tax rates, contributions to social security, unemployment benefits, implicit tax rates, incentives to work; (follow links to similar papers)
JEL-Codes: H24; (follow links to similar papers)
67 pages, February 2005
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