Assessing Hypothetical Scenarios for Estimating Labor Supply Responses: Evidence from a Pension Reform

Nicola Fuchs-Schündeln, Jonas Jessen, Pinchuan Ong and Jessica Pan

No 26251, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We assess whether survey responses to hypothetical policy scenarios can recover actual labor supply responses from policy variation. We study the German Mütterrente, a pension benefit crediting parents for child-rearing, benchmarking against Artmann et al. (forthcoming). Surveying mothers and fathers about a hypothetical reform modeled on that expansion, we find that mothers expect to reduce their labor supply, with an implied marginal propensity to earn of−0.65-close to the quasi-experimental estimate of−0.54. The response is sensible across subgroups, falls mainly on the extensive margin, and spills over to fathers. In the aggregate, spousal predictions match partners' own reports.

Keywords: marginal propensity to earn; hypothetical scenarios; subjective expectations; benchmark (search for similar items in EconPapers)
JEL-codes: D10 D84 H55 J22 J26 (search for similar items in EconPapers)
Date: 2026-09
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