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

Stefan Boeters and Michael Feil

No 08-043, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Labour market reforms that are designed to stimulate labour supply at the lower end of the wage distribution can never be precisely restricted to affect only the target group. Spillovers to and feedback from other segments of the labour market are unavoidable and may counteract the direct effects of the reform. An adequate representation of heterogeneous labour markets becomes therefore an important issue for the assessment of reforms. We analyse the possible interactions between labour market segments in a combined, consistent microsimulation-AGE model with a flexible representation of substitution possibilities and different wage-forming regimes. We look at a stylised reform and find labour-demand cross-price elasticities between the low and medium skilled to be the main drivers of the results. Interaction with the high-skilled segment is less pronounced.

Keywords: Applied general equilibrium model; microsimulation; discrete working time choice; heterogeneous labour markets; labour market reform (search for similar items in EconPapers)
JEL-codes: D58 J22 J51 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-cmp, nep-eec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Heterogeneous Labour Markets in a Microsimulation–AGE Model: Application to Welfare Reform in Germany (2009)
Working Paper: Heterogeneous labour markets in a microsimulation-AGE model: application to welfare reform in Germany (2009)
Working Paper: Heterogeneous Labour Markets in a Microsimulation-AGE Model: Application to Welfare Reform in Germany (2008)
Working Paper: Heterogeneous labour markets in a microsimulation-AGE model: application to welfare reform in Germany (2008)
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