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

  • Peter Haan
  • Viktor Steiner

We evaluate three policy reforms targeted at older unemployed people: (i) an hourly wage subsidy, (ii) an in-work credit, and (iii) an employment bonus in the form of subsidized social security contributions on low wages. The work-incentive, labor-supply, and welfare effects of these policy reforms are analyzed on the basis of a behavioral microsimulation model for Germany. We find that the simulated labor-supply effects of the three policy reforms would be rather similar and of moderate size. Our results also suggest that the hourly wage subsidy yields the highest welfare gains.

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Article provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.

Volume (Year): 64 (2008)
Issue (Month): 3 (September)
Pages: 380-402

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Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200809)64:3_380:mwpfte_2.0.tx_2-e
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  1. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  2. Olivier Bargain & Kristian Orsini, 2004. "In-work policies in Europe: killing two birds with one stone?," DELTA Working Papers 2004-13, DELTA (Ecole normale supérieure).
  3. Peter Haan, 2006. "Much ado about nothing: conditional logit vs. random coefficient models for estimating labour supply elasticities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(4), pages 251-256.
  4. 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.
  5. Steiner, Viktor, 2001. " Unemployment Persistence in the West German Labour Market: Negative Duration Dependence or Sorting?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(1), pages 91-113, February.
  6. V. Joseph Hotz & John Karl Scholz, 2001. "The Earned Income Tax Credit," NBER Working Papers 8078, National Bureau of Economic Research, Inc.
  7. Richard Blundell & Howard Reed & Thomas Stoker, 1999. "Interpreting aggregate wage growth," IFS Working Papers W99/13, Institute for Fiscal Studies.
  8. Olivier Bargain & Marco Caliendo & Peter Haan & Kristian Orsini, 2010. "“Making work pay” in a rationed labor market," Journal of Population Economics, Springer, vol. 23(1), pages 323-351, January.
  9. Creedy, John & Duncan, Alan, 2002. " Behavioural Microsimulation with Labour Supply Responses," Journal of Economic Surveys, Wiley Blackwell, vol. 16(1), pages 1-39, February.
  10. 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.
  11. 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.
  12. 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.
  13. 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.
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