A Low Wage Subsidy Scheme Against Unemployment of Low-Skilled Workers

FiFo Discussion Paper No. 07-1

26 Pages Posted: 3 May 2007

See all articles by Clemens Fuest

Clemens Fuest

ifo Institute – Leibniz Institute for Economic Research at the University of Munich; Ludwig-Maximilians-University, Munich; Center for Economic Studies (CES)

Joachim Mitschke

Goethe University Frankfurt - Faculty of Economics and Business Administration

Andreas Peichl

ZEW – Leibniz Centre for European Economic Research; University of Mannheim - School of Economics (VWL); IZA Institute of Labor Economics; University of Essex - Institute for Social and Economic Research (ISER)

Thilo Schaefer

Institut der deutschen Wirtschaft Köln

Date Written: January 23, 2007

Abstract

The reduction of the high mass unemployment is on top of the political agenda in various countries. Especially low-skilled workers with low wages suffer from this mass unemployment. Therefore, we propose a basic income scheme/low wage subsidy scheme for low-skilled workers to help them find a new job or to keep their endangered job. Based on microsimulation calculations we estimate the fiscal, labour supply and distributional effects of different reform scenarios. Furthermore, we show that employment enhancing scenarios can be financed in a revenue-neutral way under certain conditions.

Note: Downloadable document is in German.

Keywords: labour policy, wage policy

Suggested Citation

Fuest, Clemens and Mitschke, Joachim and Peichl, Andreas and Schaefer, Thilo, A Low Wage Subsidy Scheme Against Unemployment of Low-Skilled Workers (January 23, 2007). Available at SSRN: https://ssrn.com/abstract=976918 or http://dx.doi.org/10.2139/ssrn.976918

Clemens Fuest (Contact Author)

ifo Institute – Leibniz Institute for Economic Research at the University of Munich

Poschinger Str. 5
Munich, DE 81679
Germany
++89-9224-1430 (Phone)

Ludwig-Maximilians-University, Munich ( email )

Schackstrasse 4 / II
Munich, DE 80539
Germany

Center for Economic Studies (CES) ( email )

Schackstr. 4
Munich, DE 80539
Germany
++89 2180-2748 (Phone)
++89 2180-17845 (Fax)

Joachim Mitschke

Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )

Department of Economics
Frankfurt am Main
Germany

Andreas Peichl

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim - School of Economics (VWL) ( email )

Mannheim 68131
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Essex - Institute for Social and Economic Research (ISER)

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Thilo Schaefer

Institut der deutschen Wirtschaft Köln ( email )

50668 Koeln
Germany

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