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A microsimulation analysis of the 2006 regime change in the Dutch disability scheme

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Author Info
Sonsbeek, J.M. van (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)
Gradus, R.H.J.M.
Abstract

This paper introduces a microsimulation model that simulates the budgetary impact of the 2006 regime change in the Dutch disability scheme. A dynamic population model fits the case of the disability benefits the best. As opposed to macro forecasts, a microsimulation can answer questions about the individual or meso income effects, the exact distribution of expenses among different benefits and the time path of the savings. The introduction of the proposed system change decreases the number of disability benefits by more than 25 % from 2020 onwards and reduces total costs by almost _ 2 billion or 20 %. Based on the better incentive structure, participation will increase and boost GDP. Microsimulation can be used to pick the winners and losers of the new system and give the time path of the savings. It is shown that for almost all partially disabled that are working, the total discounted income after the system change is as large as or larger than before the system change, for the non-working total discounted income is lower.

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Publisher Info
Paper provided by Free University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number 0012.

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Date of creation: 2005
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Handle: RePEc:dgr:vuarem:2005-12

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Web page: http://www.econ.vu.nl

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Related research
Keywords: Disability schemes Incentive structures Micro-simulation

Find related papers by JEL classification:
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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  1. Arie Kapteyn & Klaas de Vos, 1997. "Social Security and Retirement in The Netherlands," NBER Working Papers 6135, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Nelissen, J. H. M., 1991. "Household and education projections by means of a microsimulation model," Economic Modelling, Elsevier, vol. 8(4), pages 480-511, October. [Downloadable!] (restricted)
  3. Annemiek van VUren & Daniël van Vuuren, 2005. "Financial incentives in disability insurance in the Netherlands," CPB Discussion Papers 45, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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  4. Jonathan Gruber, 2000. "Disability Insurance Benefits and Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1162-1183, December. [Downloadable!] (restricted)
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  5. John Creedy & Guyonne Kalb, 2005. "Behavioural Microsimulation Modelling for Tax Policy Analysis in Australia: Experience and Prospects," Melbourne Institute Working Paper Series wp2005n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  6. Sutherland, Holly & Taylor, Rebecca & Gomulka, Joanna, 2002. "Combining Household Income and Expenditure Data in Policy Simulations," Review of Income and Wealth, Blackwell Publishing, vol. 48(4), pages 517-36, December. [Downloadable!] (restricted)
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  7. Klevmarken, N.A., 2001. "Micro Simulation - A Tool for Economic Analysis," Papers 2001-13, Uppsala - Working Paper Series.
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  8. Cathal O'Donoghue, 2001. "Dynamic Microsimulation: A Methodological Survey," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December. [Downloadable!]
  9. François Bourguignon & Amedeo Spadaro, 2005. "Microsimulation as a tool for evaluating redistribution policies," PSE Working Papers 2005-02, PSE (Ecole normale supérieure). [Downloadable!]
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