Work incentives in the lower income segment and interactions in the German tax and transfer system

The study, conducted by the ifo Institute on behalf of the Friedrich Naumann Foundation, examines how work incentives in the lower income segment can be improved. In order to make the proposals feasible, additional long-term burdens on the state budget should be avoided. The report shows various ways to overcome the current disincentives: Combining the various social benefits as well as appropriate additional income limits allow low income households to keep a higher share of additional gross income and therefore can eliminate structural deficits.