Heterogeneous Labour Markets in a Microsimulation–AGE Model: Application to Welfare Reform in Germany

Boeters, Stefan; Feil, Michael

doi:10.1007/s10614-008-9161-3

Cited by 9 publications

(9 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…One common method, particularly in the …eld of ex-ante policy evaluation, is linking labor supply models with computable general equilibrium (CGE) models (see Bourguignon et al (2003), Bovenberg et al (2000), Boeters et al (2005), Arntz et al (2008), Feil (2009) andHérault (2010)). The advantage of our approach is that we overcome possible aggregation and linking problems in micro-macro models.…”

Section: Related Literaturementioning

confidence: 99%

Accounting for labor demand effects in structural labor supply models

Peichl

Siegloch

2012

Labour Economics

View full text Add to dashboard Cite

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 The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 5350 November 2010 ABSTRACT Accounting for Labor Demand Effects in Structural Labor Supply Models *When assessing the effects of policy reforms on the labor market, most studies only focus on labor supply. The interaction of supply and demand side is not explicitly modeled, which might lead to biased estimates of potential labor market outcomes. This paper proposes a straightforward method to remedy this shortcoming. We use information on firms' labor demand behavior and feed them into a structural labor supply model, completing the partial analysis of the labor market on the microdata level. We show the performance and relevance of our extension by introducing a pure labor supply side reform, the workfare concept, in Germany and simulating the labor market outcome of the reform. We find that demand effects offset about 25 percent of the positive labor supply effect of the policy reform.JEL Classification: J22, J23, J68

show abstract

Section: Related Literaturementioning

confidence: 99%

Accounting for labor demand effects in structural labor supply models

Peichl

Siegloch

2012

Labour Economics

View full text Add to dashboard Cite

show abstract

“…These focus on institutional detail at the cost of more and more intertwined economic effects that can only be disentangled with great effort. For a recent example of such a model with different skill types, labour supply reactions at the micro level, a differentiated sectoral structure and mobile capital, see Boeters and Feil (2009).…”

Section: Discussionmentioning

confidence: 99%

Optimal tax progressivity in unionised labour markets: What are the driving forces?

Boeters

2011

Economic Modelling

Self Cite

View full text Add to dashboard Cite

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.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp09065.pdf Non-technical summaryIn the economic policy debate, income tax progressivity is mostly seen as a means of redistribution. The more progressive the tax, the more redistribution from the rich to the poor. However, high tax progressivity also means high marginal tax rates for those with a high income, which leads to labour supply distortions in this group and, as a consequence, to a lower overall potential for redistribution. Under non-competitive wage formation, there are positive aspects of tax progressivity in the efficiency dimension as well, because tax progressivity lowers the incentives for high wage claims and leads to a downward pressure on non-competitive wages. This counteracts the labour supply distortions and creates the potential for a free lunch:simultaneous equity and efficiency gains through higher tax progressivity. I explore the empirical potential for this constellation using a model that includes both wage bargaining and flexible labour supply, so that both sides of the trade-off are captured. It is calibrated to a set of macroeconomic and institutional parameters of large OECD countries, and the optimal degree of tax progressivity is numerically determined.The most remarkable simulation result is that both at the level of average OECD parameters and for most of the individual countries, optimal tax progressivity is considerably lower than actual progressivity. At the country level, however, we do not get uniform picture. In a few countries optimal progressivity is higher than actual progressivity. The between-country differences can be traced back to differences in the initial conditions. The effect of the initial unemployment rate is particularly strong. The higher initial unemployment, the higher optimal tax progressivity. Another important driver is the general tax level. High taxes in the initial situation lead to a lower optimal level of tax progressivity. The initial level of tax progressivity plays a significant role as well. It affects optimal progressivity through the interaction with labour supply elasticities. Nicht-technische Zusammenfassung October 2009Abstract In labour markets with collective wage bargaining higher progressivity of the labour income tax creates a trade-off. On the one hand, wages are lowered and unemployment decreases, on the other hand, the individual labour supply decision is distorted at the hours-of-work margi...

show abstract

“…In Sect. 6.3, I turn to the degree of international capital mobility, which has proved to be an important driving force of the results in earlier applications of PACE-L (see Boeters and Feil 2009). In this case, we have no a priori expectation about the direction of the effect, however.…”

Section: Sensitivity Analysismentioning

confidence: 96%

“…Therefore, we have no clear hypothesis in which direction a change in capital mobility would drive the results. From other simulations with PACE-L (Boeters and Feil 2009), however, we know that international capital mobility is in fact important to the outcomes. In addition, this mechanism is particularly suited to demonstrate the general usefulness of the linkage approach.…”

Section: Variation In International Capital Mobilitymentioning

confidence: 98%

Optimal Tax Progressivity in Unionised Labour Markets: Simulation Results for Germany

Boeters

2010

SSRN Journal

Self Cite

View full text Add to dashboard Cite

Changing the income tax progressivity in labour markets with collective wage bargaining generates a trade-off. On the one hand, higher progressivity distorts individual labour supply decisions at the hours-of-work margin, on the other hand, it reduces unemployment by exerting downward pressure on wages. This trade-off is quantitatively assessed using a numerical model for Germany. The model combines a microsimulation module, which captures the labour-supply decisions of approximately 4,600 individual households, and a macro (computable general equilibrium) module, which features collective wage bargaining and involuntary unemployment. In the simulations carried out using this model, the optimal degree of tax progressivity turns out to be higher than the one in the actual German tax schedule. The optimum is located at marginal tax rates that are 6 percentage points higher than the actual rates (combined with a transfer that balances the public budget). The welfare gain from such a reform is modest, however. It amounts to no more than two euros per person per month.

show abstract

Heterogeneous Labour Markets in a Microsimulation–AGE Model: Application to Welfare Reform in Germany

Abstract: Applied general equilibrium model, Microsimulation, Discrete working time choice, Heterogeneous labour markets, Labour market reform, D58, J22, J51,

Cited by 9 publications

References 24 publications

Accounting for labor demand effects in structural labor supply models

Accounting for labor demand effects in structural labor supply models

Optimal tax progressivity in unionised labour markets: What are the driving forces?

Optimal Tax Progressivity in Unionised Labour Markets: Simulation Results for Germany

Contact Info

Product

Resources

About