Kiel Working Papers, Kiel Institute for World Economics
No 912:
Sozialhilfe, Lohnabstand und Leistungsanreize
Alfred Boss
Abstract: The difference between the potential net wage income
(including family allowances etc.) and the social welfare payments is
measured for a large number of types of private households in the Federal
Republic of Germany in 1998. It is shown that the difference is small for
households consisting of at least three persons. For three types of
households the difference between net wages and social assistance is
measured for the 1962-1998 period. It turns out that it decreased
significantly in the course of the decades. Independently of the household
type, the (explicit and implicit) marginal tax rates for wage income amount
to 100 percent for relatively large income intervals. Thus, the incentives
to work seem to be strongly impaired. There is evidence that the adjustment
of wages for low skilled workers in Germany was impeded by the system of
social assistance.
110 pages, February 1999
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