Authors

Michael Weber

  • Current position:
    Senior Economist, World Bank
  • Research interest:
    Labor markets, development economics, international economics, econometrics, statistics
  • Affiliations:
    World Bank, USA
  • Qualifications:
    Doktorat der Sozial- und Wirtschaftswissenschaften, Wirtschaftsuniversität Wien, 2008
  • Personal statement about IZA World of Labor:
    The IZA World of Labor series provides well-structured, high quality, and relevant information to guide policymakers on labor issues around the globe
  • Selected publications:
    • Balancing Regulations to Promote Jobs: From Employment Contracts to Unemployment Benefits. Washington, DC: World Bank, 2015 (with A. Kuddo and D. Robalino).
    • “Does formal work pay? The role of labor taxation and social benefit design in the new member states.” Research in Labor Economics 34 (2012): 164–204 (with J. Koettl).
    • “Severance pay programs around the world: Rationale, status, and reforms.” In: Holzmann, R., and M. Vodopivec (eds). Improving Severance Pay: An International Perspective. Washington, DC: World Bank, 2012; pp. 17–120 (with R. Holzmann, Y. Pouget, and M. Vodopivec).
    • The Generation of Recommendations for Business-to-Business Transactions as a Macroeconomic Infrastructure Service (in German). Frankfurt: Lang Verlag, 2009.
    • “The semantic web as an innovation for economic co-ordination” (in German). In: Pellegrini, T., and A. Blumauer (eds). Semantic Web—Auf dem Weg zur vernetzten Wissensgesellschaft. Berlin: Springer, 2006; pp. 89–113 (with K. A. Froeschl).
  • Articles

Measuring disincentives to formal work

Does formal work pay? Synthetic measurements of taxes and benefits can help identify incentives and disincentives to formal work

December 2015

10.15185/izawol.213 213

by Michael Weber Weber, M

Evidence from transition economies shows that formal work may not pay, particularly for low-wage earners. Synthetic measurements of work disincentives, such as the formalization tax rate or the marginal effective tax rate, confirm a significant positive correlation between these measurements and the probability of informal work. These measures are especially informative for impacts at lower wage levels, where informality is highest. Policymakers who want to increase formal work can use these measurements to determine optimal labor taxation rates for low-wage earners and reform benefit design.