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Tax credits, labour participation and home production in the Netherlands

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Abstract:

We set up a dynamic reduced form model of labour market participation for women who balance career and motherhood. The model accounts for the occurrence of future child birth and early retirement, and includes home production; however, it does not require the estimation of a structural model. Careful implementation of pension institutions can return optimal life patterns of participation without the need of a structural approach. The weaker theoretical framework is compensated by the rich spectrum of possible policy simulations. As illustration, we simulate the effect of two tax credits policy options on the hazard rate out of work.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840903459953

Affiliations: 1: Department of Economics,VU University, Amsterdam, The Netherlands 2: CPB Netherlands Bureau for Economic Policy Analysis, Centraal Planbureau, van Stolkweg 14, PO Box 80510, 2508GMThe Hague, The Netherlands

Publication date: September 1, 2011

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