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Assessing Hypothetical Scenarios for Estimating Labor Supply Responses: Evidence from a Pension Reform

Author

Listed:
  • Fuchs-Schündeln, Nicola

    (WZB - Social Science Research Center Berlin)

  • Jessen, Jonas

    (WZB - Social Science Research Center Berlin)

  • Ong, Pinchuan

    (National University of Singapore)

  • Pan, Jessica

    (National University of Singapore)

Abstract

We assess whether survey responses to hypothetical policy scenarios can recover actual labor supply responses from policy variation. We study the German Mütterrente, a pension benefit crediting parents for child-rearing, benchmarking against Artmann et al. (forthcoming). Surveying mothers and fathers about a hypothetical reform modeled on that expansion, we find that mothers expect to reduce their labor supply, with an implied marginal propensity to earn of −0.65—close to the quasi-experimental estimate of −0.54. The response is sensible across subgroups, falls mainly on the extensive margin, and spills over to fathers. In the aggregate, spousal predictions match partners’ own reports.

Suggested Citation

  • Fuchs-Schündeln, Nicola & Jessen, Jonas & Ong, Pinchuan & Pan, Jessica, 2026. "Assessing Hypothetical Scenarios for Estimating Labor Supply Responses: Evidence from a Pension Reform," IZA Discussion Papers 18944, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18944
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    Keywords

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • D10 - Microeconomics - - Household Behavior - - - General

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