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We analyse two recent proposals suggesting the subsidy of social security contributions in order to increase employment in the low wage sector in Germany. Our findings based on a behavioral microsimulation model show: First, both reforms have only small effects on labor force participation and modest positive effects on total working hours. Second, a subsidy based on individual earnings rather than on family income is more favourable to employment as it avoids the well-known negative work incentives of secondary earners.

Mehr Beschäftigung durch Subventionierung der Sozialbeiträge? Eine empirische Evaluation aktueller Reformvorschläge