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Does Work Pay in France ? Monetary Incentives and and the Guaranteed Minimum Income

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  • Marc Gurgand

    (Crest)

  • David Margolis

    (Crest)

Abstract

Most welfare programs generate high marginal tax rates on labor income.This paper uses a representative sample of individuals on France's mainwelfare program (the Revenu Minimum d'Insertion, or RMI) to estimatemonetary gains to employment for welfare recipients. This is based on thedistribution of potential monthly earnings faced by each individual, as in-ferred from the distribution of observed wages and working time. Takingaccount of the welfare earnings top-up program (int¶eressement), we ¯ndthat gains are almost always positive, but that their amount is very low,especially for single mothers. Int¶eressement is found to have a small impact,because of its provisional nature. Gains are positively related to the prob-ability that a welfare recipient in 1996 will be observed in employment in1998. Using a simple structural model, we interpret this as a labor supplye®ect.

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  • Marc Gurgand & David Margolis, 2004. "Does Work Pay in France ? Monetary Incentives and and the Guaranteed Minimum Income," Working Papers 2004-34, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2004-34
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    References listed on IDEAS

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    1. David N. Margolis, 1996. "Cohort Effects and Returns to Seniority in France," Annals of Economics and Statistics, GENES, issue 41-42, pages 443-464.
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    3. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 1039-1073.
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    6. Euwals, Rob & van Soest, Arthur, 1999. "Desired and actual labour supply of unmarried men and women in the Netherlands," Labour Economics, Elsevier, vol. 6(1), pages 95-118, March.
    7. repec:adr:anecst:y:1996:i:41-42:p:18 is not listed on IDEAS
    8. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
    9. Marc Gurgand & David Margolis, 2000. "Minima Sociaux et Revenus du Travail en France," Working Papers 2000-62, Center for Research in Economics and Statistics.
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