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Housing Benefits and Monetary Incentives to Work: Simulations for France

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  • Antoine Ferey

Abstract

[eng]This paper characterizes the impact of housing benefits on monetary incentives to work in France both at the intensive and extensive margins. Effective marginal and participation tax rates are estimated using the 2011 enquête Revenus fiscaux et sociaux (ERFS, Insee) for employed childless singles with the TAXIPP microsimulation model and decomposed by tax and transfer instruments. Means testing implies that a 1-euro increase in gross labor earnings reduces housing benefits by 27 cents on average. Combined with reductions in other means tested trans¬fers (30 cents) and the payment of social contributions (21 cents) this translates into effective marginal tax rates close to 80%. Means testing also induces a reduction in housing benefits upon taking a job which acts as a participation tax. Its magnitude depends on whether individuals receive unemployment benefits when out of work. Unemployment benefits increase overall participation tax rates by providing higher replacement earnings but decrease the participation tax linked to housing benefits by reducing the amounts of housing benefits received.

Suggested Citation

  • Antoine Ferey, 2018. "Housing Benefits and Monetary Incentives to Work: Simulations for France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 503-504, pages 37-59.
    • Handle: RePEc:nse:ecosta:ecostat_2018_503-504_3
    DOI: https://doi.org/10.24187/ecostat.2018.503d.1956
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    Cited by:

    1. Véronique Flambard, 2019. "Housing Allowances Alone Cannot Prevent Rent Arrears," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 507-508, pages 53-69.
    2. Michaël Sicsic, 2018. "Financial Incentives to Work in France between 1998 and 2014," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 503-504, pages 13-35.
    3. Elass, Kenza, 2024. "Male and female selection effects on gender wage gaps in three countries," Labour Economics, Elsevier, vol. 87(C).

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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