In Germany persons who receive public assistance (Sozialhilfe) may keep only a small part of income from employment above a certain amount. This means that for some persons living on welfare the economic incentives to look for employment are rather weak. This working paper discusses different methods of determining welfare payments to welfare recipients who are employed, including the negative income tax. It is shown that in the context of the current German tax-transfer System there is no really saticfactory method for determining those payments. Some new ideas for improving the current method are given.
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