Accounting for labor demand effects in structural labor supply models

Peichl, Andreas; Siegloch, Sebastian

doi:10.1016/j.labeco.2011.09.007

Cited by 53 publications

(40 citation statements)

References 61 publications

(51 reference statements)

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“…the literature and we confirm the U-shaped pattern across skill levels, which has been documented by several studies (Falk and Koebel, 1997;Fitzenberger, 1999;Peichl and Siegloch, 2012), with own-price elasticities being largest for low skilled labor.…”

Section: Conditional Elasticitiessupporting

confidence: 90%

Labor demand effects of rising electricity prices: Evidence for Germany

et al. 2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Germany plays a pioneering role in replacing conventional power plants with renewable energy sources. While this is beneficial with respect to environmental quality, the energy turnaround implies increasing electricity prices for private households and firms. The extent to which this is associated with negative impacts on employment depends on the interrelationship between labor and electricity as input factors. In this paper, we estimate cross-price elasticities between electricity and heterogeneous labor for the German manufacturing sector. We use administrative linked employer-employee micro data combined with information on electricity prices and usage during the period 2003-2007. Our findings suggest that there is a weak substitutability between electricity and labor, when the production level is held constant. We find positive, but small conditional cross-price elasticities of labor demand with respect to electricity prices between 0.09 and 0.31. In case of adjustable output, we find moderate gross complementarity with negative unconditional cross-elasticities ranging between -0.06 and -0.69. Labor demand is affected differently across skill levels with low-and high-skilled workers being affected more than mediumskilled. Our estimates suggest that the announced increase of the EEG surcharge in 2014 would decrease overall employment in the manufacturing sector by 86,000 workers, a decline by 1.4 percent. Terms of use: Documents in P O L I C Y P A P E R S E R I E SJEL Codes: J08, J23, Q48, Q58

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Section: Conditional Elasticitiessupporting

confidence: 90%

Labor demand effects of rising electricity prices: Evidence for Germany

et al. 2014

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“…The labor supply e ects simulated here have to be interpreted as medium-term outcomes, i. e., after households have adjusted their labor supply behavior to the new institutional environment. If one assumes a negative wage elasticity of labor demand, firms will react to higher labor supply by lowering o ered wages, leading to an equilibrium outcome below the initial labor supply shift (Peichl and Siegloch, 2012).…”

Section: Labor Supply E Ectsmentioning

confidence: 99%

“…16 In the results presented so far, unemployment benefits are indexed by the inflation rate. The additional two columns in Table 1 16 Microsimulation approaches with demand side restrictions are provided by Creedy and Duncan (2005) and Peichl and Siegloch (2012). In both studies, at least half of the supply e ect is maintained.…”

Section: Labor Supply E Ectsmentioning

confidence: 99%

Shifting Taxes from Labor to Consumption: More Employment and More Inequality

Pestel

Sommer

2015

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Abstract This paper investigates the e ect of shifting taxes from labor income to consumption on labor supply and the distribution of income in Germany. We simulate stepwise increases in the value-added tax (VAT) rate, which are compensated by revenue-neutral reductions in income-related taxes. We di erentiate between the personal income tax (PIT) and social security contributions (SSC). Based on a dual data base and a microsimulation model of household labor supply behavior, we find a regressive impact of such a tax shift in the short run. When accounting for labor supply adjustments, the adverse distributional impact persists for PIT reductions, while the overall e ects on inequality and progressivity become lower when payroll taxes are reduced. This is partly due to increases in aggregate labor supply, resulting from higher work incentives. Shifting Taxes from Labor to JEL Classification: C63, D31, H23Keywords: income and payroll taxes, consumption taxes, microsimulation, inequality, Germany ú Nico Pestel (pestel@iza.org) is a liated to IZA Bonn and the Center for European Economic Research (ZEW) Mannheim. Eric Sommer (sommer@iza.org) is a liated to IZA Bonn and the University of Cologne. Corresponding author: Eric Sommer, IZA Bonn,

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“…Nevertheless, further improvements are still necessary to model the labour market equilibrium that can emerge as a consequence of a policy simulation (Colombino, 2013), to take into account demand side constraints (Peichl and Siegloch, 2012) and to exploit the longitudinal dimension of micro-data, where this is available, in order to avoid labour supply estimates being potentially biased by individual unobserved characteristics and to consider the state dependence in the labour supply behaviour (Haan, 2010 …”

Section: Figure 5 Europe and Us: Own-wage Elasticitiesmentioning

confidence: 99%

Microsimulation and Policy Analysis

Figari

Paulus

Sutherland

2015

Handbook of Income Distribution

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ISER Working Paper Series www.iser.essex.ac.uk Microsimulation and Policy AnalysisNon-technical summary This paper is prepared as a chapter forthcoming in the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland). Microsimulation methods are increasingly used to study the effects of policies on the income distribution contributing both to policy debates and academic literature. In general terms, microsimulation refers to modelling changes in the state or behaviour of micro-level units. We provide an overview of approaches that address questions related to the impact of taxbenefit policies on household income distribution. We first discuss how microsimulation modelling contributes to the analysis of the income distribution more broadly, pointing out that it can enrich survey and administrative data by checking its consistency, adding further details and enhancing analytical flexibility. In addition, it provides the basis for calculating indicators that cannot otherwise be estimated directly from micro-data such as measures of work incentives, net support for children and automatic stabilisers embedded in tax-benefit systems. We then focus more specifically on the role of microsimulation in policy evaluation. Taxbenefit models can provide information on household disposable income and its components under various policy scenarios and as such constitute a unique tool for ex ante policy analysis, though equally can be used for ex post analysis. We review the formal framework underlying such microsimulation-based decomposition analysis of income distribution and suggest a broader perspective to accommodate a wider range of applications. Our main emphasis is on static modelling methods, though we also consider extensions accounting for behavioural reactions and links with macroeconomic models. As microsimulation models are often concerned with current and future policies, we discuss various approaches to predict the income distribution given that data providing information on the current situation becomes available with a time lag, distinguishing between nowcasting and forecasting. We emphasise the role of comparative analysis as cross-country differences in tax-benefit systems and population structures provide a basis to assess the robustness of results and generalise conclusions. We provide empirical illustrations drawing mainly on analysis using the EU-wide tax-benefit model EUROMOD. Covering 27 countries and made generally accessible this is now one of the most widely used models. There are many remaining challenges to providing estimates of the effects of policy and policy changes that can be used with confidence within policy analysis and we consider three major issues: reconciling the simulated income distribution and that measured using the original micro-data; accounting for benefit non take-up and tax non-compliance, as well as validating and assessing the statistical reliability of microsimulation estimates. While our main focus is on the distributio...

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Accounting for labor demand effects in structural labor supply models

Cited by 53 publications

References 61 publications

Labor demand effects of rising electricity prices: Evidence for Germany

Labor demand effects of rising electricity prices: Evidence for Germany

Shifting Taxes from Labor to Consumption: More Employment and More Inequality

Microsimulation and Policy Analysis

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