The tax reform proposals by the Dutch government include several shifts in the tax structure and a cut in the overall tax burden. This paper argues that these reform proposals reduce the unemployment rate only if the gap between wage incomes and unemployment benefits increases and the overall tax burden drops. Targeting the tax reduction to the unskilled seems the most effective way to cut unemployment. However, such targeted measures raise the marginal tax on other incomes, thereby harming the quantity and quality of labor supply.

Centraal Planbureau, Den Haag
hdl.handle.net/1765/1956
Erasmus School of Economics

de Mooij, R.A, Graafland, J.J, & Bovenberg, A.L. (1998). Tax reform and the Dutch labor market in 21st century. Centraal Planbureau, Den Haag. Retrieved from http://hdl.handle.net/1765/1956