Simulating a Job Guarantee

Costs and benefits of a public employment programme for long-term unemployed in Austria

PROJECT CO-ORDINATOR

Tamara Premrov

PROJECT TEAM AT THE EUROPEAN CENTRE

Leonard Geyer

AIMS

The aim of the project was to estimate public net costs and distributional effects of a job guarantee for long-term unemployed in Austria in 2021, specifically:

  • To what extent would direct costs for subsidised employment be offset by savings in social benefit payments and additional tax revenue and social insurance contributions?
  • What is the programme's impact on inequality and poverty?
  • Which types of households and age groups would benefit most from a job guarantee?

METHODS

The analysis was based on the tax-benefit microsimulation model EUROMOD/SORESI.

FINDINGS

The results of this study suggest that the costs of a job guarantee for the long-term unemployed in Austria are very low. At a salary of € 1,500 per month, the net cost is only € 568 per person. Even at higher salaries a considerable part of the gross expenses flows back to the state as tax revenue or social security contributions. The self-financing ratio in our standard model is 69.6%.

A job guarantee would significantly reduce the at-risk-of-poverty rate in Austria. It primarily benefits the two lowest income quintiles and thus reduces inequality. In general, more men than women benefit from a job guarantee, as men are more often affected by long-term unemployment. Looking at participants' income gains, we find that they are highest for women, families and multi-person households without children, youth, and individuals with university degrees, as these groups receive less state support while unemployed.

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