Wage Subsidies to fight Working Poor : Why the U.S. are more successful than Germany

Abstract

"'Make work pay' strategies are an integral part of labour market policy instruments in developed countries. There are two considerations behind these measures. Firstly, subsidizing employment at the bottom of the income distribution should motivate the unemployed to accept jobs with lower market wages. Secondly, the wage supplement should increase the living standards of the recipients and reduce the risk of poverty. The U.S. EITC and the German UB II based on these two goals. Our paper begins with an overview of these two wage top-up schemes. This is followed by an empirical evaluation of the two instruments regarding their capacity to prevent in-work poverty and to strengthen labour market participation. The EITC obtains better results compared to UB II in both regards." (Author's abstract, © Springer-Verlag) ((en))

Cite article

Berthold, N. & Coban, M. (2014): Kombilöhne gegen Erwerbsarmut. Warum die USA erfolgreicher sind als Deutschland. In: Wirtschaftsdienst, Vol. 94, No. 2, p. 118-124. DOI:10.1007/s10273-014-1635-4