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Forecasting Behavioural and Distributional Effects of the Bofinger-Walwei Model using Microsimulation

Author

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  • Wiemers Jürgen

    (Institut für Arbeitsmarkt- und Berufsforschung, Regensburger Straße 104, 90478 Nürnberg, Germany)

  • Bruckmeier Kerstin

    (Institut für Arbeitsmarkt- und Berufsforschung, Regensburger Straße 104, 90478 Nürnberg, Germany)

Abstract

Since Germany’s social assistance reform (“Hartz-IV-Reform”) in 2005 there has been a strong increase in the number of working poor and long-term unemployed. This development is often attributed to the remaining disincentives of the reformed social assistance to take up a low-paid full time job. Therefore, several proposals have been worked out to reduce these disincentives. In this paper we analyse an in-work benefit programme considered by the German government, which follows the proposal of Bofinger et al. (2006). We employ a microsimulation model for estimating labour supply as well as distributional and fiscal effects of this reform proposal.We provide “morning after effects”, i.e. fiscal effects without considering behavioural adjustments, and long run effects, which take into account the labour supply response following the introduction of the reform.We predict the labour supply responses by estimating a discrete choice model for different household types and find a moderate increase in labour supply (103,000 full-time equivalents) as well as overall low negative participation effects. The distributional analysis reveals an overall increase in poverty rates caused by lower earnings disregards as well as substantial deadweight losses, since a large part of the in-work benefit accrues to households who do not belong to the working poor in the status quo.

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  • Wiemers Jürgen & Bruckmeier Kerstin, 2009. "Forecasting Behavioural and Distributional Effects of the Bofinger-Walwei Model using Microsimulation," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(4), pages 492-511, August.
    • Handle: RePEc:jns:jbstat:v:229:y:2009:i:4:p:492-511
    DOI: 10.1515/jbnst-2009-0408
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    Cited by:

    1. Bruckmeier, Kerstin & Mühlhan, Jannek & Wiemers, Jürgen, 2018. "Erwerbstätige im unteren Einkommensbereich stärken : Ansätze zur Reform von Arbeitslosengeld II, Wohngeld und Kinderzuschlag," IAB-Forschungsbericht 201809, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Bruckmeier, Kerstin & Wiemers, Jürgen, 2016. "Differences in welfare take-up between immigrants and natives," VfS Annual Conference 2016 (Augsburg): Demographic Change 145828, Verein für Socialpolitik / German Economic Association.
    3. Kerstin Bruckmeier & Jürgen Wiemers, 2018. "Benefit Take-Up and Labor Supply Incentives of Interdependent Means-Tested Benefit Programs for Low-Income Households," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(4), pages 583-604, December.
    4. Bruckmeier, Kerstin & Wiemers, Jürgen, 2016. "Differences in welfare take-up between immigrants and natives : a microsimulation study," IAB-Discussion Paper 201608, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Wiemers, Jürgen, 2015. "Endogenizing take-up of social assistance in a microsimulation model : a case study for Germany," IAB-Discussion Paper 201520, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    6. Jürgen Wiemers, 2015. "Endogenizing take-up of social assistance in a microsimulation model. A case study for Germany," International Journal of Microsimulation, International Microsimulation Association, vol. 8(2), pages 4-27.
    7. Kerstin Bruckmeier & Jürgen Wiemers, 2017. "Benefit take-up and labour supply incentives of interdependent means-tested benefit programmes for low-income households," EcoMod2017 10295, EcoMod.
    8. Bruckmeier, Kerstin & Wiemers, Jürgen, 2011. "A new targeting - a new take-up? : non-take-up of social assistance in Germany after social policy reforms," IAB-Discussion Paper 201110, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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