TITLE OF THE PROJECT
MAKING WORK PAY IN THE WESTERN BALKANS: The case of Serbia and Macedonia
The project is supported by the Regional Research Promotion Program (RRPP), coordinated and operated by the Interfaculty Institute for Central and Eastern Europe (IICEE) at the University of Fribourg (Switzerland). RRPP aims at fostering and promoting social science research in the Western Balkans and is fully funded by the Swiss Agency for Development and Cooperation (SDC), Federal Department of Foreign Affairs.
The project will be jointly implemented with the Foundation for the Advancement of Economics (FREN), the leading partner from Serbia, and will be financially supported for duration of 12 months (July 2012- June 2013).
The purpose of this research is to provide ex ante evidence about the possible effects of alternative tax and benefit policy reforms aimed at promoting employment, particularly among low-paid labor. In order to do this, the principal aim of the research is to build methodological tools for assessing the impact of alternative tax and social policy solutions on key social inclusion and labor market outcomes in Macedonia and Serbia. To achieve this, the specific objectives of the research are twofold:
- to develop a labor supply model for Serbia and link it to the existing tax-benefit micro-simulation model for the country (SRMOD); and
- based on the experience with SRMOD, to build similar tax and benefit micro-simulation model for Macedonia (MAKMOD), including a labor supply model for the country.
Once complete methodological tools are developed, they will be used for the third objective of the research: simulation, for each country, of the following policy options with the intention to tackle the unemployment and poverty trap for low skilled individuals:
- Abolishment of the minimum social security contribution base; and
- Introduction of two “making work pay” policies (in-work benefits).
Policy option of eliminating the minimum social security contribution base has been advocated in Serbia as well as and Macedonia by the World Bank (2008, 2010). What this study would offer is empirical evidence about potential effects of this and other reforms aimed at promoting employment.
Results of policy simulations as well as the further possibilities of the model could be presented: i) to relevant policy makers, civil society and media representatives at special round table meetings; and ii) to the scientific community, by drafting a journal paper on the structure of the models and the specific measures’ simulation outcomes.