Beschreibung:
<jats:title>Abstract</jats:title>
<jats:p>Any policy measure aimed at reducing high unemployment in Germany needs to tackle the substantive disincentive effects that unemployment assistance and social assistance have on labor supply. The article elaborates on a reform proposal presented by the German Council of Economis Experts in ist Annual Report 2002/2003. Abolishing unemployment assistance would allow for a reform of social assistance that considerably increases the incentive to search for work by lowering the reservation wage as well as the marginal effective tax rate on income earned on the labor market.</jats:p>