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Implementing a negative income tax (NIT) system would be preferable to raising the minimum wage, in terms of both reducing poverty levels and encouraging employment, Bank of Israel deputy research administrator Michel Strawczinski told the annual conference of Hebrew University's Falk Institute for Economic Research Wednesday.
While the cost to public coffers of subsidizing low incomes through NIT is higher than raising minimum wage, raising the minimum wage has been shown to hurt employment by placing the bulk of the burden on employers, he said. Applying an NIT system based on the number of children would lift 25,000 families out of poverty, he noted.
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