Do earned income tax credits for older workers prolong labor market participation and boost earned income? Evidence from Australia's mature age worker tax offset

Vol: 
15/2018
Author name: 
Breunig, R
Carter, A
Year: 
2018
Month: 
July
Abstract: 

We examine Australia’s Mature Age Worker Tax offset (MAWTO), a targeted earned income tax credit of up to $500 to incentivize participation of older workers that existed from 2004-05 to 2014-15. Using a difference-in-differences approach, we find that MAWTO increased labor market participation by around 0.5 percentage points. For women only, it had a small impact on earnings of about 1.5 per cent. We estimate that the average cost for each person induced to work longer is between $37,000 and $78,000.

Publication file: 

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