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16 Mikroekonomia

BANK I KREDYT styczeń 2008

Germany and Polaud by additioual payments iu tbe form of stntc-fmanccd mamtenance payments or a spccial snppiement iu Family Beuefits, respectively. In-work iucomes are higher in tlie UK for the families which do receive maintenauce, and so these families have strouger meeiitives to work than lone pareuts who do not receive support from the nbsent parent. Wliat is also uołeworthy wheu lookiug at the budget constraint charts is the very big difference m disposable iucomes of lone pareuts who are not eligible for Housiug Benefit compared to those who do receive the HB (Figures 2 and 3). It is also iuteresting to point out that unlike in the UK and Germany where Social Assistauce is treated separately from the Housiug Benefit (iu the sense that the Housiug Benefit is not treated as income for the Social Assistauce means-test), iu Polaud the family profiles 2 and 3 - in theory, i.e. accordiug to the legislated minimum income • are eligible for the same level of support at zero hours of work. Moreover, the effect of the Working Tax Credit iu the UK is most prouounced (see Figures 3A and 4A) especially iu the case of lone pareuts who cauuot claim the HB. This effect will also be quite elear iu the morę detailed analysis of replacement ratios below.

5.2.2. Support lor couples wilh children

As wecan see iu Figures 7,8,9,12 and 13 the generosity of the basie support for families witli children iu couples is much higher in Germany compared to the UK and Polaud.¹⁸ Au important difference which cannot be seen on the pictures presented here is the fact that the Polish family support is ineans-tested, while botli in the UK and Germany it is uuiversal, i.e. independent of the level of family income. While in the UK the Child Benefit is supplemented by payments through the Childreifs Tax Credit and the Working Tax Credit (which is morę geuerous for those witli children), in Polaud the families received no further child-related support from the stale

6. Results - replacement ratios

In this section we discuss the results presented in Tables 3 and 4 which show replacement ratios computed for the 13 family profiles for each of the three assumed wagę rates usiug the formulae discussed iu Section 4. From the point of view of the labour market it is especially uuporłant how fiuaucial iuceutives - here expressed iu the form of RRs - differ by family próbie for the same level of relative earnings aud how they differ for a giveu family profile for different levels of earnings, i.e. how stroug is the progression of the disposable income as earnings rise.

Giveu the Iow level of out of work means-tested support in Polaud (we assume that the families receive only the centrally guaranteed proporłion of Temporary Social Assistauce) it is not surprising that iu most cases financial incentives to work as reflecied iu the RRs are strougest in Polaud. This is the case especially for single adults without children (family profile, FP1) and first earners iu couples without children (FP6). For these family profiles financial uicentives to take up employmeut are siguificantly strouger in Polaud, compared to the UK and Germany. Financial incentives to part-time work in Polaud are similar iu maguitiide to those related to ftlll-time employmeut iu the other two couutries. As far as the comparisoii between the UK aud Germany is concerned it is wortli miting that while iuceutives to part-time work in the UK are very Iow (due to the very high beuefits withdrawal rates at Iow iucomes), tlus is no longer the case for full-time work, which at all wagę levels is fiuancially morę attractive in the UK compared to Germany. This is the case botli for siugles and couples without children.

6.1.    Financial incentives for lone-parents

For lone pareuts the comparisoii between the UK and Germany proves to go very strougly iu favour of the UK, where financial incentives to work for family profiles 2, 3, 4 aud 5, all except one unply higher attractiveuess of employmeut at all three wagę Ievels. Financial incenthres are especially strong in the UK in the case of a lone parent witli one child who is not eligible to receive the Housiug Benefit (FP4). In this case in fact, financial incenthres to part-time work at the two Iower wagę rates are even strouger in the UK than in Polaud. This is the effect of the additioual beuefits which lone pareuts iu the UK receive in the form of in-work support. The high level of this support at part-time work ca u also be noticed iu Figurę 4. It is iuteresting to notę, thougli, that ouce the WTC is withdrawu (at higher levels of earnings) the difference iu financial attractweness of work diiniuishes aud in fact the full-time RR (Table 4) for the 50“ perceutile wagę is Iower in Germany than iu the UK (0.354 relative to 0.363). Owing to the Working Tax Credit employmeut is also siguificantly morę attractive iu the UK compared to Germany for family profile 5. For this family profile the effect of the in-work support is such that the RRs computed for the UK are very close to those calculated iu the case of the respective family under the Polish system.

6.2.    Financial incentives (or first and second earners in couples

Iu the case of first earners iu couples (i.e. family profiles 6-9) the patteru is relativelv similar, witli relatively strong effects of in-work support iu the UK, especially for families with children iu the cases of Iow assumed