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Making Work Pay for the Elderly Unemployed: Evaluating Alternative Policy Reforms for Germany

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Author Info
Peter Haan () (DIW Berlin and Free University Berlin)
Viktor Steiner () (DIW Berlin, Free University Berlin and IZA Bonn)
Abstract

We evaluate three policy reforms targeted at older unemployed people: (i) an hourly wage subsidy, (ii) an in-work credit, and (iii) a subsidy of social security contributions on low wages. The work incentive, labour supply and welfare effects of these hypothetical reforms are analysed on the basis a detailed micro-simulation model for Germany which includes a structural household labour supply model. We find that the simulated labour supply effects of the three policy reforms would be rather similar and of moderate size, ranging between 20,000 and 30,000 older women and between 10,000 and 20,000 older men. Our results also suggest that the hourly wage subsidy yields the highest welfare gains.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2424.

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Length: 29 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2424

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Related research
Keywords: in-work support; wage subsidies; unemployment; elderly workers;

Other versions of this item:

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Olivier Bargain & Marco Caliendo & Peter Haan & Kristian Orsini, 2005. "'Making Work Pay' in a Rationed Labour Market: The Mini-Job Reform in Germany," Discussion Papers of DIW Berlin 536, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  2. V. Joseph Hotz & John Karl Scholz, 2001. "The Earned Income Tax Credit," NBER Working Papers 8078, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  4. Peter Haan & Michal Myck, 2006. "Apply with Caution: Introducing UK-Style In-work Support in Germany," Discussion Papers of DIW Berlin 555, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  5. Creedy, John & Duncan, Alan, 2002. " Behavioural Microsimulation with Labour Supply Responses," Journal of Economic Surveys, Blackwell Publishing, vol. 16(1), pages 1-39, February. [Downloadable!] (restricted)
  6. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March. [Downloadable!]
  7. Richard Blundell & Howard Reed & Thomas Stoker, 1999. "Interpreting aggregate wage growth," IFS Working Papers W99/13, Institute for Fiscal Studies. [Downloadable!]
  8. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 141-198 National Bureau of Economic Research, Inc. [Downloadable!]
  9. Andreas Ammermüller & Bernhard Boockmann & Michael Maier & Thomas Zwick, 2006. "Eingliederungszuschüsse und Entgeltsicherung für Ältere: Analysen auf Basis natürlicher Experimente," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(3), pages 49-66. [Downloadable!] (restricted)
  10. Olivier Bargain & Marco Caliendo & Peter Haan & Kristian Orsini, 2006. "'Making Work Pay' in a Rationed Labour Market," IZA Discussion Papers 2033, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Bargain, Olivier & Orsini, Kristian, 2006. "In-work policies in Europe: Killing two birds with one stone?," Labour Economics, Elsevier, vol. 13(6), pages 667-697, December. [Downloadable!] (restricted)
    Other versions:
  12. Viktor Steiner & Peter Haan & Katharina Wrohlich, 2005. "Dokumentation des Steuer-Transfer-Mikrosimulationsmodells STSM 1999 - 2002," Data Documentation 9, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ronny Freier & Viktor Steiner, 2007. "‘Marginal Employment’: Stepping Stone or Dead End? Evaluating the German Experience," IZA Discussion Papers 3175, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Ronny Freier & Viktor Steiner, 2007. ""Marginal Employment": Stepping Stone or Dead End? Evaluating the German Experience," Discussion Papers of DIW Berlin 744, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  3. Michal Myck, 2007. "Wages and Ageing: Is There Evidence for the "Inverse-U" Profile?," IZA Discussion Papers 2983, Institute for the Study of Labor (IZA). [Downloadable!]
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This page was last updated on 2009-11-30.

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