Indicators of unemployment and low-wage traps (marginal effective tax rates on labour)

Abstract

This paper presents results of an on-going joint European Commission / OECD project, aimed at monitoring the direct influence of tax and benefit instruments on household incomes. Indicators of financial work incentives are needed for identifying any undesired influences of taxes and social transfers on people's work decisions. At the same time, a central part of recent tax and benefit reform strategies has been to reduce reliance on welfare by “making work payâ€, that is, to make work an economically attractive option relative to welfare. It is therefore desirable to monitor the effects of such policies as well as the potential for further reform..taxation, fiscal policy, household income, marginal effective tax rates, METR, unemployment trap, inactivity trap, low-wage trap, employment, Carone, Salom�ki, Immervoll, Paturot