Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71306
Authors: 
Bargain, Olivier
Immervoll, Herwig
Peichl, Andreas
Siegloch, Sebastian
Year of Publication: 
2010
Series/Report no.: 
Working Paper Series, UCD Centre for Economic Research 10/30
Abstract: 
Macro-level changes can have substantial effects on the distribution of resources at the household level. While it is possible to speculate about which groups are likely to be hardest-hit, detailed distributional studies are still largely backward-looking. This paper suggests a straightforward approach to gauge the distributional and fiscal implications of large output changes at an early stage. We illustrate the method with an evaluation of the impact of the 2008-2009 crisis in Germany. We take as a starting point a very detailed administrative matched employer-employee dataset to estimate labor demand and predict the effects of output shocks at a disaggregated level. The predicted employment effects are then transposed to household-level microdata, in order to analyze the incidence of rising unemployment and reduced working hours on poverty and inequality. We focus on two alternative scenarios of the labor demand adjustment process, one based on reductions in hours (intensive margin) and close to the German experience, and the other assuming extensive margin adjustments that take place through layoffs (close to the US situation). Our results suggest that the distributional and fiscal consequences are less severe when labor demand reacts along the intensive margin.
Subjects: 
Labor demand
Tax-benefit system
Crisis
Income distribution
JEL: 
D58
J23
H24
H60
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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