Thursday, December 20, 2007
Tweet[IWS] Brookings: EMPLOYMENT-BASED TAX CREDITS FOR LOW-SKILLED WORKERS [December 2007]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Brookings Institution
The Hamilton Project
Employment-Based Tax Credits for Low-Skilled Workers [December 2007]
John Karl Scholz, University of Wisconsin
http://www.brookings.edu/papers/2007/12_taxcredit_scholz.aspx
or
http://www.brookings.edu/~/media/Files/rc/papers/2007/12_taxcredit_scholz/12_taxcredit_scholz.pdf
[full-text, 36 pages]
Abstract
Families in low-income communities face three interrelated problems: unemployment
rates are high, incarceration rates of low-skilled men are high, and a large fraction of
children in low-income communities are being raised in single-parent households. To
address these interrelated problems, I propose a two-part policy designed to increase the
return to work. The first part of my proposal is an expanded earned income tax credit
that would apply to low-income, childless taxpayers. The second part of my proposal is a
targeted wage subsidy for low-wage workers who live in certain economically depressed
areas, whereby the federal government would pay subsidies of 50 percent of the difference
between the worker�s market wage and a target wage of $11.30 per hour. The premise
for adopting these policies is straightforward: increasing the return to work for childless
low-skilled workers will lower unemployment rates and achieve the dual social benefits of
reducing incarceration rates and increasing marriage rates, thus reducing the number of
children being raised in single-parent households. The proposal would redistribute $10.4
billion to poor, working individuals. Based on empirical estimates from the literature,
I expect employment to increase by 850,000 jobs and crime to fall by over one million
incidents. Conservative estimates of the social cost of crime indicate that the social benefit
from reduced crime could cover 8 percent or more of the cost of the proposal. Many estimates
of the cost of crime would claim much larger cost saving. The proposal would also
increase marriage and improve the environments in which poor children are raised.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Brookings Institution
The Hamilton Project
Employment-Based Tax Credits for Low-Skilled Workers [December 2007]
John Karl Scholz, University of Wisconsin
http://www.brookings.edu/papers/2007/12_taxcredit_scholz.aspx
or
http://www.brookings.edu/~/media/Files/rc/papers/2007/12_taxcredit_scholz/12_taxcredit_scholz.pdf
[full-text, 36 pages]
Abstract
Families in low-income communities face three interrelated problems: unemployment
rates are high, incarceration rates of low-skilled men are high, and a large fraction of
children in low-income communities are being raised in single-parent households. To
address these interrelated problems, I propose a two-part policy designed to increase the
return to work. The first part of my proposal is an expanded earned income tax credit
that would apply to low-income, childless taxpayers. The second part of my proposal is a
targeted wage subsidy for low-wage workers who live in certain economically depressed
areas, whereby the federal government would pay subsidies of 50 percent of the difference
between the worker�s market wage and a target wage of $11.30 per hour. The premise
for adopting these policies is straightforward: increasing the return to work for childless
low-skilled workers will lower unemployment rates and achieve the dual social benefits of
reducing incarceration rates and increasing marriage rates, thus reducing the number of
children being raised in single-parent households. The proposal would redistribute $10.4
billion to poor, working individuals. Based on empirical estimates from the literature,
I expect employment to increase by 850,000 jobs and crime to fall by over one million
incidents. Conservative estimates of the social cost of crime indicate that the social benefit
from reduced crime could cover 8 percent or more of the cost of the proposal. Many estimates
of the cost of crime would claim much larger cost saving. The proposal would also
increase marriage and improve the environments in which poor children are raised.
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 4:28 PM
