Skip to content

EUROMOD Working Paper Series EM11/12

Improving work incentives: evaluation of tax policy reform using SRMOD

Authors

Publication date

20 Dec 2012

Abstract

Inactivity and unemployment rates as well as informal employment rates in Serbia are particularly high among low-paid labor. Labour tax wedge is average at higher wage levels, but high at lower wage levels. The relatively high labour tax burden for low-paid employees is due to several reasons. The most important one is the existence of mandatory minimum base for social security contribution (SSC). This paper uses the tax and benefit micro-simulation model for Serbia (SRMOD), which is based upon EUROMOD platform, in order to evaluate the effects of the abolishment of mandatory minimum SSC base on labour supply incentives. We found that this policy reform would reduce effective average tax rates by more than it would reduce marginal tax rates implying a larger participation response than hours-of-work response. A decrease in both tax rates is most pronounced for lower income groups.

Subjects

Labour Market, Microsimulation, and Taxation

Paper download  


Related publications

  1. Improving work incentives in Serbia: evaluation of a tax policy reform using SRMOD

    Saša Ranđelović and Jelena Žarković Rakić

    1. Labour Market
    2. Microsimulation
    3. Taxation

#521066


Research home

Research home

News

Latest findings, new research

Publications search

Search all research by subject and author

Podcasts

Researchers discuss their findings and what they mean for society

Projects

Background and context, methods and data, aims and outputs

Events

Conferences, seminars and workshops

Survey methodology

Specialist research, practice and study

Taking the long view

ISER's annual report

Themes

Key research themes and areas of interest