1. Final Project Conference : Making work pay in Western Balkan countries: the case of Serbia and Macedonia FREN, Serbia and UACS, Macedonia

2. Making work pay in Western Balkan countries: the case of Serbia and Macedonia Lead organization Foundation for the Advancement of Economics (FREN), Belgrade, Serbia implemented the project in partnership with University American College - Skopje (UACS), Macedonia Period: July 2012 to October 2013 Research team: Mihail Arandarenko, Jelena Žarković Rakić, Marjan Petreski, Sunčica Vujić, Nikica Mojsoska Blazevski, Sasa Ran đ elović, Marko Vladisavljević, Despina Petreska Support form Francesco Figari ( University of Insubria - Varese (Italy) and a Research Associate in Institute for Social and Economic Research – ISER at the University of Essex ) and Horacio Levy ( OECD )

3. Overall objective of the project This research examines employment, poverty and income inequality effects of introducing making work pay (MWP) policies MWP policies (or in-work benefits) are means-tested transfers given to individuals conditional on their employment status They intend to enhance the incentives to accept work and to redistribute resources to low income groups

4. Motivation High inactivity rates of 39% in Serbia High informal employment rates of 18.2% in Serbia Inactivity and informal employment rates higher among: – low-educated individuals – those with low skills – women These groups have low earnings capacity → financial payoffs from staying in or seeking employment are often limited

5. Motivation Incentive problems are aggravated by high tax burdens on labour income and by social benefits design (sudden withdrawal of benefit once a person has formal income on his/her record)

6. Motivation Those taking up low-paid employment see that large part of their gross earnings is consumed by income taxes, social contributions or reduced social benefits => Need incentives to make (formal) work pay On the labour demand side, MWP reasonable choice given that the minimum wage in Serbia is high (50% of the average wage ) and suspected to discourage hires