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Model Situations of Families with Small Children Regarding Earnings When Caring Parent Enters Labour Market. Robert Jahoda VUPSV, v.v.i. Presentation Contents. Theory – Model Evaluation of Labour Market Entry Conditions Practical Examples Household 2+2; Prague Household 1+1; Prague - PowerPoint PPT Presentation

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  • Model Situations of Families with Small Children Regarding Earnings When Caring Parent Enters Labour Market

    Robert JahodaVUPSV, v.v.i

  • Presentation Contents Theory Model Evaluation of Labour Market Entry ConditionsPractical ExamplesHousehold 2+2; PragueHousehold 1+1; PragueHousehold 2+3; ZlnHousehold 1+1; Municipality up to 10,000 inhabitantsConclusions and Discussion

    *

  • Maternal Employment Rates by Age of Youngest Child, 2007 (OECD; Family Database)*

  • Financial Stimuli by Labour Market EntryChange of tax payment (social and health insurance + income tax)Costs of childcare (scope of services vs. price)Costs of commuting (?)

    Deciding about work optimizing process how many options can they choose from?

    Loss of parental allowances (?)Reduction of other state social support allowances (?)Decreased allowances of assistance in material need (?)

    Financial stimuli are not the only factor in the family decision making *

  • AETR Financial Stimuli IndicatorIf I decide to start a job for the gross wage of CZK 20,000 (HP1) and the net monetary income for the household is CZK 6,000 (PP), I will be subjected to effective taxation of 70 %

    Is the net monetary income sufficient to compensate for my starting a job?*

  • What do we know about households receiving family allowances?StructureEducationHousing and costsIncome differentiation*

  • Model HouseholdsA household with children, one is 2 years oldThe woman is deciding whether to enter the labour marketBy entering the labour market, she can expect an income that will depend, among others, on:Scope of employment Abilities (education)Regional labour market

    QUESTION: What effective taxation will the household be subjected to if its earned income is x % of the income median (CZK 20,000)*

  • Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 150 % of the median; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation for Various Levels of Partner's Incomefamily 2+2; home ownership in Prague; college education; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation and its Decomposition family 2+2; home ownership in Prague; college education; partner's wage is 0 % of the median; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 0 % of the median; higher parental allowance assessment; private childminding CZK 12,000*

  • Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 75 % of the median; basic parental allowance assessment; nursery (CZK 2,500)*

  • Effective Taxation and its Decompositionfamily 2+2; home ownership in Prague; college education; partner's wage is 75 % of the median; basic parental allowance assessment; nursery (CZK 2,500)*

  • Effective Taxationfamily 1+1; tenement in Prague; secondary education with a graduation exam; basic parental allowance assessment; nursery (CZK 2,500)*

  • Net Income and its Decompositionfamily 1+1; tenement in Prague; secondary education with a graduation exam; basic parental allowance assessment; nursery (CZK 2,500)*

  • Effective Taxation and its Decompositionfamily 2+3+2; home ownership in Zln (+ parents); apprentice education; partner's wage is 75 % of the median; basic parental allowance assessment; a childminding grandmother*

  • Effective Taxation and its Decompositionfamily 1+1+2; living with parents in a small town; apprentice education; basic parental allowance assessment; a childminding grandmothercosts for commuting CZK 3,000*

  • Conclusions and DiscussionThe decision about entering the labour market is influenced mainly by the costs of childcare together with the entitlement to parental allowancesThe impact of other allowances is limited the beneficiary is rarely poverty-strickenThe tax system "discourages" from part-time employmentTYPICAL CASELoss of parental allowance: CZK 7,600Nursery costs: CZK 2,500Loss of tax discount for the "partner": CZK 2,070 xxxxxxxxxxxxxxxxxxxxxxxxxTOTAL: CZK 12,170*

  • Financial Impact - StateA woman on parental leave from the perspective of the state:Saved costs for nurseries (carried by the establisher)Lower tax revenues the model does not include social and health insurance paid by employers (34 %)Duty to pay the health insurance for the woman on parental leave *

  • THANK YOU FOR YOUR ATTENTION*

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