Prague Economic Papers 2009, 18(3):235-250 | DOI: 10.18267/j.pep.352

Labour Market Participation: The Impact of Social Benefits in the Czech Republic and Selected European Countries

Kamila Fialová1, Martina Mysíková2
1 Institute of Economic Studies, Charles University in Prague, and Komerční banka, Prague (kfialova@email.cz).
2 Institute of Economic Studies, Charles University in Prague, and Institute of Sociology of the Academy of Sciences, Prague (martina.mysikova@centrum.cz).

This paper aims to quantify the impact of social benefits on labour market participation in the Czech Republic and provides a comparison with selected European countries. It applies the logistic regression to estimate the probability of labour market participation depending on social benefits related to net wage of the individuals, controlling for individual and household characteristics. Our results indicate that the work disincentives via social benefits do exist in most of the included countries and they proved to be relatively strong in the Czech Republic. When trying to understand the reasons for recently decreasing participation rate in the Czech Republic, the often called ""generous"" Czech social benefit system appears to be relevant.

Keywords: social benefits, inactivity trap, labour market participation
JEL classification: I38, J21

Published: January 1, 2009  Show citation

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Fialová, K., & Mysíková, M. (2009). Labour Market Participation: The Impact of Social Benefits in the Czech Republic and Selected European Countries. Prague Economic Papers, 18(3), 235-250. doi: 10.18267/j.pep.352
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