Distributional and Behavioural Effects of the German Labour Market Reform

26 Pages Posted: 6 Feb 2008 Last revised: 26 Oct 2009

See all articles by Markus Clauss

Markus Clauss

ZEW – Leibniz Centre for European Economic Research

Reinhold Schnabel

affiliation not provided to SSRN

Date Written: 2008

Abstract

We estimate the effects of the reform of the German Unemployment Insurance that replaced the wage related Unemployment Assistance with an income maintenance program and stronger means testing. We model the tax-benefit system and use the Socio-Economic Panel. We estimate a discrete labour supply model and simulate the behavioural and distributional effects using the pseudo-distribution method. Poverty and inequality decline overall, since households with children and low income gain, while those who used to earn high wages and received high unemployment transfers lose most. The behavioural responses mitigate the redistributive impact of the reform.

Keywords: distribution analysis, household labour supply, microsimulation, poverty, Germany

JEL Classification: D31, I32, J22, H31, I38

Suggested Citation

Clauss, Markus and Schnabel, Reinhold, Distributional and Behavioural Effects of the German Labour Market Reform (2008). ZEW - Centre for European Economic Research Discussion Paper No. 08-006, Available at SSRN: https://ssrn.com/abstract=1090830 or http://dx.doi.org/10.2139/ssrn.1090830

Markus Clauss (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Reinhold Schnabel

affiliation not provided to SSRN ( email )

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