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Impact of in-work Benefits on Work Incentives in Croatia: A Microsimulation Analysis

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  • Bezeredi Slavko

    (Slavko Bezeredi, PhD, Research Associate, Institute of Public Finance, Smičiklasova 21, 10000 Zagreb, Croatia)

Abstract

Generous social benefit systems reduce work incentives, which has prompted more than half of the EU countries to introduce some sort of make work pay policies. Previous research for Croatia has shown that certain types of households have very low work incentives. Therefore, this paper aims to analyse the impact of in-work benefits on work incentives of non-employed persons and the poverty rate in Croatia. Using the tax-benefit microsimulation model EUROMOD, which is based on the EU-SILC 2020 data, three hypothetical types of in-work benefits are simulated. The results show that the characteristics and the design of in-work benefits are essential, and the choice of the appropriate type of benefit depends on the policy objectives. This paper is the first to analyze the impact of in-work benefits on the work incentives of all non-employed persons in Croatia.

Suggested Citation

  • Bezeredi Slavko, 2024. "Impact of in-work Benefits on Work Incentives in Croatia: A Microsimulation Analysis," South East European Journal of Economics and Business, Sciendo, vol. 19(2), pages 30-45.
    • Handle: RePEc:vrs:seejeb:v:19:y:2024:i:2:p:30-45:n:1003
    DOI: 10.2478/jeb-2024-0014
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    References listed on IDEAS

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    1. Bargain, Olivier & Orsini, Kristian, 2006. "In-work policies in Europe: Killing two birds with one stone?," Labour Economics, Elsevier, vol. 13(6), pages 667-697, December.
    2. Olivier Bargain & Marco Caliendo & Peter Haan & Kristian Orsini, 2010. "“Making work pay” in a rationed labor market," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(1), pages 323-351, January.
    3. Slavko Bezeredi & Marko Ledić & Ivica Rubil & Ivica Urban, 2019. "Making work pay in Croatia: An ex-ante evaluation of two in-work benefits using miCROmod," International Journal of Microsimulation, International Microsimulation Association, vol. 12(3), pages 28-61.
    4. Bartels, Charlotte & Pestel, Nico, 2016. "Short- and long-term participation tax rates and their impact on labor supply," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(6), pages 1126-1159.
    5. Slavko Bezeredi & Ivica Urban, 2016. "Predicting gross wages of non-employed persons in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 40(1), pages 1-61.
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    More about this item

    Keywords

    work incentives; in-work benefit; microsimulation; Croatia;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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