Wohlfahrts- und Verteilungseffekte eines allgemeinen Freibetrags bei den Sozialabgaben

The paper simulates the labor market impact of a fixed allowance for social insurance contributions. Based on a discrete choice labor supply model estimated using data from the German Socio-Economic Panel, we evaluate household utility changes triggered by the reform, including behavioral responses. Directly the reform raises individual welfare throughout. However, refinancing its substantial fiscal costs through a general consumption tax reduces aggregate labor supply and household utility levels, with progressive absolute losses. A poll tax preserves the immediate positive labor supply effect, but reverses entirely the benefits from the allowance except for households in the lowest income decile.

Bonin, Holger and Hilmar Schneider (2005), Wohlfahrts- und Verteilungseffekte eines allgemeinen Freibetrags bei den Sozialabgaben, Zeitschrift für Arbeitsmarktforschung 38(4) , 475-492