Incentives to work for recipients of unemployment benefit II - a reform proposal (original publication in German)
Recipients of the means-tested unemployment benefits II face high (explicit and implicit) tax rates if they start working or increase work efforts. Beyond certain wage limits, they have to pay wage income tax, solidarity surcharge and contributions to the social security system. In addition, the benefits are reduced according to specific rules. A proposal to reduce the tax rates and thus to increase the incentives to work is presented in the paper.