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Robert Jahoda VUPSV, v.v.i

Model Situations of Families with Small Children Regarding Earnings When Caring Parent Enters Labour Market. Robert Jahoda VUPSV, v.v.i. Presentation Contents. Theory – Model Evaluation of Labour Market Entry Conditions Practical Examples Household 2+2; Prague Household 1+1; Prague

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Robert Jahoda VUPSV, v.v.i

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  1. Model SituationsofFamilieswithSmallChildrenRegardingEarningsWhenCaringParentEntersLabour Market Robert Jahoda VUPSV, v.v.i

  2. Presentation Contents • Theory – Model Evaluation of Labour Market Entry Conditions • Practical Examples • Household 2+2; Prague • Household 1+1; Prague • Household 2+3; Zlín • Household 1+1; Municipality up to 10,000 inhabitants • Conclusions and Discussion

  3. Maternal Employment Rates by Age of Youngest Child, 2007 (OECD; Family Database)

  4. Financial Stimuli by Labour Market Entry • Change of tax payment (social and health insurance + income tax) • Costs of childcare (scope of services vs. price) • Costs of commuting (?) • Deciding about work – optimizing process  how many options can they choose from? • Loss of parental allowances (?) • Reduction of other state social support allowances (?) • Decreased allowances of assistance in material need (?) • Financial stimuli are not the only factor in the family decision making

  5. AETR – Financial Stimuli Indicator • If I decide to start a job for the gross wage of CZK 20,000 (HP1) and the net monetary income for the household is CZK 6,000 (ΔČPP), I will be subjected to effective taxation of 70 % • Is the net monetary income sufficient to compensate for my starting a job?

  6. What do we know about households receiving family allowances? • Structure • Education • Housing and costs • Income differentiation

  7. Model Households • A household with children, one is 2 years old • The woman is deciding whether to enter the labour market • By entering the labour market, she can expect an income thatwill depend, among others, on: • Scope of employment • Abilities (education) • Regional labour market • QUESTION: What effective taxation will the household be subjected to if its earned income is x % of the income median (CZK 20,000)

  8. Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 150 % of the median; higher parental allowance assessment; private childminding CZK 12,000

  9. Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000

  10. Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000

  11. Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000

  12. Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000

  13. Effective Taxation and its Decomposition family 2+2; home ownership in Prague; college education; partner's wage is 0 % of the median; higher parental allowance assessment; private childminding CZK 12,000

  14. Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 0 % of the median; higher parental allowance assessment; private childminding CZK 12,000

  15. Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 75 % of the median; basic parental allowance assessment; nursery (CZK 2,500)

  16. Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 75 % of the median; basic parental allowance assessment; nursery (CZK 2,500)

  17. Effective Taxationfamily 1+1; tenement in Prague; secondary education with a graduation exam; basic parental allowance assessment; nursery (CZK 2,500)

  18. Net Income and its Decompositionfamily 1+1; tenement in Prague; secondary education with a graduation exam; basic parental allowance assessment; nursery (CZK 2,500)

  19. Effective Taxation and its Decompositionfamily 2+3+2; home ownership in Zlín (+ parents); apprentice education; partner's wage is 75 % of the median; basic parental allowance assessment; a childminding grandmother

  20. Effective Taxation and its Decompositionfamily 1+1+2; living with parents in a small town; apprentice education; basic parental allowance assessment; a childminding grandmothercosts for commuting CZK 3,000

  21. Conclusions and Discussion • Thedecisionaboutenteringthelabour market isinfluencedmainly by thecostsofchildcaretogetherwiththeentitlement to parentalallowances • Theimpactofotherallowancesis limited – thebeneficiaryisrarelypoverty-stricken • The tax system "discourages" from part-timeemployment TYPICAL CASE • Loss of parental allowance: CZK 7,600 • Nursery costs: CZK 2,500 • Loss of tax discount for the "partner": CZK 2,070 xxxxxxxxxxxxxxxxxxxxxxxxx • TOTAL: CZK 12,170

  22. Financial Impact - State • A woman on parental leave from the perspective of the state: • Saved costs for nurseries (carried by the establisher) • Lower tax revenues – the model does not include social and health insurance paid by employers (34 %) • Duty to pay the health insurance for the woman on parental leave

  23. THANK YOU FOR YOUR ATTENTION

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