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Distributional and Behavioural Effects of the German Labour Market Reform

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Listed author(s):
  • Clauss, Markus
  • Schnabel, Reinhold

Abstract

We estimate the effects of the reform of the German Unemployment Insurance that replaced the wage related Unemployment Assistance with an income maintenance program and stronger means testing. We model the tax-benefit system and use the Socio-Economic Panel. We estimate a discrete labour supply model and simulate the behavioural and distributional effects using the pseudo-distribution method. Poverty and inequality decline overall, since households with children and low income gain, while those who used to earn high wages and received high unemployment transfers lose most. The behavioural responses mitigate the redistributive impact of the reform.

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File URL: https://www.econstor.eu/bitstream/10419/24676/1/dp08006.pdf
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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-006.

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Date of creation: 2008
Handle: RePEc:zbw:zewdip:7017
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Keywords: distribution analysis; household labour supply; microsimulation; poverty; Germany;

Find related papers by JEL classification:

  • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
  • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
  • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
  • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
  • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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  1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
  2. 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.
  3. Keane, Michael & Moffitt, Robert, 1998. "A Structural Model of Multiple Welfare Program Participation and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 553-589, August.
  4. José Labeaga & Xisco Oliver & Amedeo Spadaro, 2008. "Discrete choice models of labour supply, behavioural microsimulation and the Spanish tax reforms," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 6(3), pages 247-273, September.
  5. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, vol. 64(2), pages 295-332, March.
  6. John Creedy & Guyonne Kalb, 2005. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Journal of Economic Surveys, Wiley Blackwell, vol. 19(5), pages 697-734, December.
  7. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
  8. Creedy, John & Duncan, Alan, 2002. " Behavioural Microsimulation with Labour Supply Responses," Journal of Economic Surveys, Wiley Blackwell, vol. 16(1), pages 1-39, February.
  9. Laisney, François & Beninger, Denis, 2002. "Comparison between unitary and collective models of household labor supply with taxation," ZEW Discussion Papers 02-65, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  11. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  12. Jacobebbinghaus, Peter & Steiner, Viktor, 2003. "Reforming Social Welfare as We Know It? A Microsimulation Study for Germany," ZEW Discussion Papers 03-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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Cited by:

  1. Bräuninger, Michael & Michaelis, Jochen & Sode, Madlen, 2013. "10 Jahre Hartz-Reformen," HWWI Policy Papers 73, Hamburg Institute of International Economics (HWWI).
    • Michael Bräuninger & Jochen Michaelis & Madlen Sode, 2013. "10 Jahre Hartz-Reformen," MAGKS Papers on Economics 201318, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. Clauss, Markus & Schubert, Stefanie, 2009. "The ZEW combined microsimulation-CGE model: innovative tool for applied policy analysis," ZEW Discussion Papers 09-062, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Merda, Meiko & Braeseke, Grit & Dreher, Birger & Bauer, Thomas K. & Mennicken, Roman & Otten, Sebastian & Scheuer, Markus & Stroka, Magdalena A. & Talmann, Anna E. & Braun, Helmut, 2012. "Chancen zur Gewinnung von Fachkräften in der Pflegewirtschaft: Kurzfassung. Studie im Auftrag des Bundesministeriums für Wirtschaft und Technologie," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 72586.
  4. Norbert Berthold & Mustafa Coban, 2014. "Kombilöhne gegen Erwerbsarmut: Warum die USA erfolgreicher sind als Deutschland," Wirtschaftsdienst, Springer;German National Library of Economics, vol. 94(2), pages 118-124, February.

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