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Christopher Heady OECD, Centre for Tax Policy and Administration Herwig Immervoll OECD, Employment, Labour and Social Affairs. REWARDING JOBS: Government Policy and Work Incentives. Introduction Methodology Illustrations Taxation of low-paid workers Tax treatment of families
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Christopher HeadyOECD, Centre for Tax Policy and Administration Herwig Immervoll OECD, Employment, Labour and Social Affairs REWARDING JOBS:Government Policy and Work Incentives
Introduction Methodology Illustrations Taxation of low-paid workers Tax treatment of families Tax advantages for two-earner couples Net replacement rates Low-wage ‘traps’ and marginal effective tax rates Escaping poverty Conclusions Outline
Benefit dependency Need for incentives & adequate income levels Role of policy indicators Identify sub-groups Measure progress International comparison Taxing Wages Benefits and Wages Introduction
Both are based on ‘typical families’ Internationally comparable policy indicators Focus on policy rules rather than policy outcomes:abstracts from population differences Tax-benefit position in a particular situation Plus: effects of transitions financial incentives Taxing Wages Taxes (including social security contributions) and universal benefits only Incomes from 67% to 167% of APW Benefits and Wages Adds means-tested and unemployment benefits Covers lower income levels Methodology
Monitoring policies:Complementing macro- and outcome-based indicators Source: OECD, various years, Taxing Wages; Implicit Tax Rates based on an updated version of Carey and Rabesona (2002).
Tax treatment of families Source: OECD, 2003, Taxing Wages.
Tax advantages for two-earner couples Source: OECD, 2003, Taxing Wages.
Employment transitions:Net replacement rates Source: OECD, 2004, Benefits and Wages.
Long-term unemployment Source: OECD, 2004, Benefits and Wages.
A more complete picture:How much remains in workers’ pockets? Source: OECD, 2004, Benefits and Wages.
Adding up taxes and transfers:Low-wage ‘traps’ & marginal effective tax rates Source: OECD, 2004, Benefits and Wages.
Income Adequacy Source: OECD, 2004, Benefits and Wages.
OECD’s Taxing Wages & Benefits and Wages provide policy-relevant indicators that are suitable for international comparisons of tax and benefit structures Different indicator(s) appropriate for different policy issues OECD models contain details of policy rules examine different family and labour market situations Flexible framework that can generate additional indicators as the need arises Comparing resulting indicators across countries: ‘league tables’? Conclusions
