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Les prestations sociales et l'offre de travail: y a-t-il une trappe à inactivité?

David N. Margolis and Christophe Starzec

Abstracts

This paper considers the relevance of the argument that generous welfare payments can induce an ``inactivity trap'' where people prefer to remain outside of the labour market, subsisting on transfer payments, than to look for paid employment. We use microsimulation techniques to evaluate the disposable income differences as a consequence of labour status change from inactivity to activity and the resulting modification in the tax burden and social transfers. In our approach we suppose that the decision of work participation depends on the expected net gain from activity (NGA) conditional on the probability of finding a job. The NGA is defined as the difference between total income in case of activity and all transfer revenues in case of inactivity and is used as one of determinants in a labour force participation decision model. The elasticity of the labour force participation probability with respect to NGA is interpreted as a measure of the risk of an inactivity trap. The econometric analysis of participation behaviour with respect to GNA variable shows a weak incentive effect which would suggest only very limited poverty trap risk. Moreover this effect is identifiable only for lone adult households and in a linear specification. In the preferred, non linear specification the incentive effect is insignificant for all types of households.

Our conclusion is that the households' tax-benefit environment in France does not influence significantly the labour force participation decision even for households with low potential incomes from work.

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References

Electronic reference

David N. Margolis and Christophe Starzec, “Les prestations sociales et l'offre de travail: y a-t-il une trappe à inactivité?”Économie publique/Public economics [Online], 17 | 2005/2, Online since 11 May 2007, connection on 16 May 2025. URL: http://journals.openedition.org/economiepublique/2340; DOI: https://doi.org/10.4000/economiepublique.2340

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About the authors

David N. Margolis

CNRS, TEAM-Université de Paris 1 Panthéon-Sorbonne, CREST-Laboratoire de microéconométrie et IZA

Christophe Starzec

CNRS, TEAM-Université de Paris 1 Panthéon-Sorbonne et INSEE-Division Études Sociales

By this author

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Copyright

The text and other elements (illustrations, imported files) are “All rights reserved”, unless otherwise stated.

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