This article analYzes the economic effects of individualization of the tax an unemployment assistance system by means of an applied general equilibrium model for The Netherlands. The simulation results show that individualizing the income tax system by cancelling the transferability of the basic allowance between spouses stimulates labor supply and raises employment. Individualization of the social assistance system is more risky. The number of benefit recipients might increase if improper use of benefits cannot be effectively controlled for. By consequence, labor supply will be reduced and employment will fall. Only if improper use of the individualized unemployment assistance can be prohibited, will individualization have positive effects on labor supply.
