The Individual's Perspective: Financial Incentives for Taking up Work
Abstract:One of the main objectives of current disability benefit reforms in all four countries is to increase incentives for persons with disability to take up or to remain in work. Disability and other public benefits are an important source of income for people with disability, especially in lower income groups. While these benefits are particularly targeted in Ireland, they provide lower net replacement rates than in the other three countries. The design of these benefits in combination with income taxation can create work disincentives. Average effective taxation is high in all four countries and reaches 70% to 90% with a few exceptions. Different in‐work benefit elements are operated to overcome this problem but are either too small in size (Finland), have a take‐up problem (Ireland) or are effective only for higher‐income groups (Netherlands).
Document Type: Review Article
Publication date: November 1, 2008