Page 33 - IDEA Study 3 2018 Low skilled

driven by two regions with very low unemployment rates of the low-skilled (Praha and Vysočina). These findings further confirm the importance of work incentives and their likely impact on the decision of the low-skilled to enter the labor market. Figure 6. Regional Variation in the Participation Tax Rates of the Non-working Low-skilled and the Unemployment/Inactivity of the Low-skilled inacr = .33757 + .24206 ptrf R2 = 4.0% Stredocesky unemplr = .13242 - .07299 ptrf R2 = 0.6% Olomoucky Moravskoslezsky JihomoravskUystecky Kralovehradecky Vysocina Moravskoslezsky Ustecky Karlovarsky Kralovehradecky Vysocina Jihocesky Zlinsky Liberecky Pardubicky Plzensky Liberecky Plzensky Pardubicky Jihomoravsky Karlovarsky Praha Jihocesky Stredocesky Zlinsky Olomoucky Praha .35 .4 .45 .5 .55 PTR for non-working low-skilled (full-time job) n = 14 RMSE = .0518463 .35 .4 .45 .5 .55 PTR for non-working low-skilled (full-time job) n = 14 RMSE = .0396649 Source: LFS data 2014-2016, TAXBEN model and SILC data 2016, own calculation. Indebtedness: Regions with more low-skilled are also more likely to suffer from high indebtedness Long-term unemployment often leads to debt accumulation, insolvency, and personal bankruptcy. When a high share of wages goes towards repayment of debts, the motivation to start (legal) employment is very low. Moreover, wage garnishments11 impose a further administrative burden on employers, who are less willing to hire people with debts. Consequently, indebtedness is also an important obstacle to (re)entering employment. 11 Wage garnishment is the process of deducting money from an employee's monetary compensation (including salary), usually as a result of a court order. 31 .35 .4 .45 .5 .55 unemployment rate of low-skilled .05 .1 .15 .2