Resumen de Active Welfare State Policies and Labour Supply in Spain

Francesc Oliver Rullan, Amedeo Spadaro Giardina

• This paper shows the effect of tax reforms aimed at encouraging Spanish mothers to join the labour market (or not to abandon it). The simulated reforms replace the current in-work benefit (of €100 a month) with more generous scenarios. The analysis is conducted using a behavioural microsimulation model of the Spanish tax-benefit system. The results show that in-work benefits boost the female labour participation rate and labour supply of low-income households (those with higher elasticities). Indeed there is an improvement in social welfare, but we should not overlook the impact on tax revenue.