Mathieu Lefebvre

Tax Evasion, Welfare Fraud, and "The Broken Windows" Effect: An Experiment in Belgium, France and the Netherlands

In a series of experiments conducted in Belgium (Wallonia and Flanders), France and the Netherlands, we compare behavior regarding tax evasion and welfare dodging, with and without information about others’ behavior. Subjects have to decide between a ‘registered’ income, the realization of which will be known to the tax authority for sure, and an ‘unregistered’ income that will only be known with some probability. This unregistered income comes from self-employment in the Tax treatment and from black labor supplementing some unemployment compensation in the Welfare treatment. Subjects have then to decide on whether reporting their income or not, knowing the risk of detection. The results show that (i) individuals evade more in the Welfare treatment than in the Tax treatment; (ii) many subjects choose an option that allows for tax evasion or welfare fraud but report their income honestly anyway; (iii) examples of low compliance tend to increase tax evasion while examples of high compliance exert no influence; (iv) tax evasion is more frequent in France and the Netherlands; Walloons evade taxes less than the Flemish. There is no cross-country difference in welfare dodging.

Disability in Belgium: There is More than Meets the Eye

The paper provides a perspective on the development of the Belgian disability insurance system. Using both survey and administrative data, it sketches a picture of the (changing) factors leading towards disability, as well as the outcomes in terms of program participation. The paper shows the key role of integrating other forms of early retirement programs into the analysis. The main findings are an unspectacular trend in the number of DI beneficiaries over time combined with a strong expansion of (early-) retirement schemes.

Health Status, Disability and Retirement Incentives in Belgium

Many Belgian retire well before the statutory retirement age. Numerous exit routes from the labor force can be identified: old-age pensions, conventional early retirement, disability insurance, and unemployment insurance are the most prominent ones. We analyze the retirement decision of Belgian workers adopting an option value framework, and pay special attention to the role of health status. We estimate probit models of retirement using data from SHARE. The results show that health and incentives matter in the decision to exit from the labor market. Based on these results, we simulate the effect of potential reforms on retirement.

FGT Old-Age Poverty Measures and the Mortality Paradox: Theory and Evidence

Income†differentiated mortality, by reducing the share of poor persons in the population, leads to the “Mortality Paradox†: the worse the survival conditions of the poor are, the lower is the measured poverty. We show that FGT measures (Foster et al., ) are, in general, not robust to variations in survival conditions. Then, following Kanbur and Mukherjee (), we propose to adjust FGT poverty measures by extending the income profiles of the prematurely dead, and we identify the condition under which so†adjusted FGT measures are robust to mortality changes. Finally, we show, on the basis of data from 2007 on old†age poverty in 11 European economies, that the effect of extending income profiles of the prematurely dead on poverty measurement varies with: (1) the fictitious income assigned to the prematurely dead; (2) the degree of poverty aversion; (3) the shape of the (unadjusted) income distribution; and (4) the strength of the income/mortality relationship.

Unemployment and Retirement in a Model with Age-specific Heterogeneity

This paper presents a model where young and old workers compete for one type of jobs in the presence of retirement opportunity. Within this framework, we show that increased retirement opportunities (such as a decrease of the retirement age) has most of the time a depressing impact on the unemployment rate. Indeed the number of vacancies posted by firms is influenced by the probability that an old worker is going into retirement. We show that the degree to which younger workers are influenced by retirement of older workers depends on the relative productivity of young and older workers. It is only when older workers are much more productive than young workers that retirement may benefit to unemployment.

Global: What Makes a Good Higher Education Minister?

Academia is a rather awkward sector to (ad)minister. It is home to peculiarities such as academic tenure, peer-reviewed publications, and shared governance. Its higher education institutions are a key engine for local economies and they also play an increasingly active role at an international level, linked both to their teaching and research activities. Having experience of daily life within academia can be an asset if you are a higher education minister in charge of regulating the system.

Raising the Age of Retirement: An Example of Political Ratchet Effect

Political resistance to a progressive increase in the retirement age is widespread in a number of European countries. We present a simple model explaining why such a reform can be opposed even when it is profitable to a majority of citizens. Then, we try to explain the existence of wide differences in the average length of retirement across countries and over time.