ABSTRACT

In the last three decades labour market policy in The Netherlands, as in many other countries, has considerably changed its outlook. This chapter reviews the current state of affairs with regard to financial incentives for making work pay as well as social security reform and discusses both topics from a comparative perspective with special emphasis on The Netherlands. It presents a simple transitional labour market model plus some statistics on making work pay, which leads to a discussion of issues of optimal policy design. The chapter describes recent advances in making work pay and social security reform in The Netherlands, followed by concluding remarks. It discusses making-work-pay (MWP) and social security reform. The chapter describes policy reform in the areas of making work pay and social security. MWP is an important issue, since marginal effective tax rates (METRs) are found to be high not only in The Netherlands but in many other countries as well.