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Title:Analysing welfare reform in a microsimulation-AGE model: the value of disaggregation PDF Logo
Authors:Arntz, Melanie
Boeters, Stefan
Gürtzgen, Nicole
Schubert, Stefanie
Issue Date:2006
Series/Report no.:ZEW Discussion Papers 06-76
Abstract:We present a combined, consistent microsimulation-AGE model that uses the labour market model PACE-L, data from the German Socio-Economic Panel and a discrete choice labour supply estimation. The model is used to analyse a reform that cuts the social assistance minimum income and lowers the transfer withdrawal rate in order to encourage labour force participation at the lower end of the wage distribution. We compare a disaggregated and an aggregated version of the model as well as a partial and a general equilibrium variant. It turns out that both disaggregation and general equilibrium feedback tend to mitigate the labour supply response to the reform proposal. While some labour supply indicators react quite sensitively to the level of aggregation, most macroeconomic variables are considerably more robust.
Subjects:applied general equilibrium
discrete working time choice
labour market
wage bargaining
labour market reform
logit model
microsimulation
JEL:D58
J51
J22
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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