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Tax, Welfare, and Pension Reforms in Slovenia: Implications for Work Incentives and Labor Participation
Author:
Mr. Philippe Egoume Bossogo
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and
Ms. Anita Tuladhar
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Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 298
Language:
English
Publication Date:
01 Dec 2006
DOI:
https://doi.org/10.5089/9781451865585.001
ISBN:
9781451865585
ISSN:
1018-5941
Pages:
33
Keywords:
WP; retirement age; flat tax; minimum wage; personal income; wage growth
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The labor participation rate in Slovenia has been lower than in the EU-15 (the members states prior to May 2004), particularly for the low-income and older individuals. Using simulations of tax and social benefits and public pensions, the paper shows how the current tax, welfare, and pension systems create disincentives to work among these groups. The paper finds that incentives to retire early are strong for men, especially low-wage earners. The marginal effective tax rates also make it costly for low-income individuals to work and negatively affect the probability of participating. The paper proposes reform measures to enhance work incentives and labor participation, which will be crucial for dealing with population aging and for achieving higher potential growth in Slovenia.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund