Publication

This paper analyzes the incentives to work for several groups of the labor force based on a description of the German system of taxes and transfers. The authors particularly examine the effects on the incentives of the 'Hartz IV' reform that came into effect in 2005. They find that the marginal tax rates for most groups of the labor force remain high and conclude that employment probably will not be affected significantly by that part of the reform which aims at strengthening the incentives to work. The other elements of the reform are addressed in brief.