Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68956
Authors: 
Immervoll, Herwig
O'Donoghue, Cathal
Year of Publication: 
2001
Series/Report no.: 
EUROMOD Working Paper Series EM4/01
Abstract: 
This paper considers the methodology of measuring replacement rates, comparing simulation based approaches, which simulate replacement rates for a representative sample of the population, with other approaches that simulate replacement rates for typical families or are entirely based on recorded household data. We emphasise the advantages of the first method. Utilising a cross-country microsimulation model for Europe, EUROMOD, we generate the distribution of replacement rates for four European countries, Denmark, France, Spain and the UK. In particular we show the important role of household composition and the presence of other household members' incomes in preserving the standard of living while out of work. We argue that, given this strong influence of primary incomes, replacement rates are not necessarily the best indicator of the impact of the taxbenefit system in this respect. To isolate the effects of the tax-benefit system on both work incentives and the degree of social protection for the out-of-work population, we therefore introduce a new measure, the “tax-benefit-to-earnings ratio”.
Subjects: 
Net Replacement Rate
Unemployment Benefits
Work Incentives
European Union
Microsimulation
JEL: 
H31
J65
E60
C81
Document Type: 
Working Paper

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