Work Incentives, Earnings-Related Subsidies, and Employment in Low-Wage Labor Markets - Empirical Analysis and Policy Simulations for Germany
- Department(s)/ Research Infrastructure
- Public Economics
- Project Status
- Completed Project
- Project Manager
- Viktor Steiner
- Project Team/Contacts at DIW Berlin
Sponsor
Deutsche Forschungsgemeinschaft (DFG)
Abstract
The goal of this project is to empirically analyze the work incentive and employment effects of earnings-related subsidies in the presence of high structural unemployment when labor market flexibility is hindered by wage rigidity related to institutional factors, in particular minimum wages and means-tested income support for unemployed people. We specify and estimate a structural microeconometric model that accounts for both demand-side rationing in low-wage labor markets and the disincentive effects to take up low-wage jobs induced by the tax-benefit system. The model accounts for both the extensive and intensive labor supply margin as well as joint labor supply decision of couples and non-convexities of household budget constraints due to the complexity of the German tax-benefit system. We apply the model to the evaluation of the labor market and welfare effects of earnings-related subsidies in the presence of minimum wages.
Publications
Bargain, O., M. Caliendo, P. Haan and K. Orsini (2005), ‘Making work pay’ in a rationed labour market. The Mini-Job reform in Germany, DIW Discussion Papers No. 53
Caliendo, M. and V. Steiner (2005), Aktive Arbeitsmarktpolitik in Deutschland. Bestandsaufnahme und Bewertung der mikroökonomischen Evaluatonsergebnisse. Zeitschrift für ArbeitsmarktForschung – Journal of Labour Market Research, 38, 2/3, 386-418.
Caliendo, M., L. Gambaro and P. Haan (2006), The Impact of Income Taxation on the Ratio between Reservation and Market Wages and the Incentives for Labour Supply, IZA Discussion Paper No. 2599, forthcoming in: Applied Economics Letters 2008.
Caliendo, M. and K. Wrohlich (2006), Evaluating the German 'Mini-Jobs' Reform Using a True Natural Experiment. IZA Discussion Papers No. 2041, Bonn, forthcoming in: Applied Economics 2008.
Freier, R., V. Steiner (2007a), ´Marginal employment´: stepping stone or dead end? Evaluating the German experience. DIW Discussion Paper No. 744, Berlin.
Freier, R., V. Steiner (2007b), ´Marginal Employment´ and the demand for heterogeneous labour: Empirical evidence from a multi-factor labour demand model for Germany. DIW Discussion Paper No. 744, Berlin.
Glocker, D. and V. Steiner (2007), Self-employment – A Way to End Unemployment? Empirical Evidence from German Pseudo-Panel Data. DIW Discussion Papers No. 661, Berlin.
Haan, P. (2005), State dependence and female labour supply in Germany: The extensive and the intensive margin, DIW Discussion Papers No. 538.
Haan, P. (2007), Intertemporal Labor Supply Effects of Tax Reforms. DIW Discussion Papers No. 669, Berlin.
Haan, P., V. Prowse and A. Uhlendorff (2006), Estimation of multinomial logit models with unobserved heterogeneity using maximum simulated likelihood, Stata Journal 6, 229-245.
Haan, P. and A. Uhlendorff (2007), Intertemporal Labor Supply and Involuntary Unemployment, DIW Discussion Papers No. 790, IZA Discussion Papers No. 2888
Haan, P. and V. Steiner (2007), Mehr Beschäftigung durch Subventionierung der Sozialbeiträge? Eine empirische Evaluation aktueller Reformvorschläge, Perspektiven der Wirtschaftspolitik 8(4), 378-388.
Müller, K.-U. and V. Steiner (2008), Imposed Benefit Sanctions and the Unem-ployment-to-Employment Transition – The German Experience. DIW Discussion Papers No. 792
Müller, K.-U. and V. Steiner (2008), Would a Legal Minimum Wage Reduce Poverty? - A Microsimulation Study for Germany. DIW Discussion Papers No. 791
Schmitz H., V. Steiner (2007), Benefit-Entitlement Effects and the Duration of Unemployment - An Ex-ante Evaluation of Recent Labour Market Reforms in Germany, DIW Discussion Paper No. 678, Berlin.
Steiner, V. (2006), Subventionierung von Beschäftigung im Niedriglohnbereich - Ein Ausweg aus der Beschäftigungskrise? Wirtschaftspolitische Blätter, 53(2), 213-228.
Steiner, V. (2007), Beschäftigungsförderung und Einkommenssicherung im Niedriglohnbereich - Wege und Irrwege. DIW Discussion Papers No. 747, Berlin
Steiner, V. and K. Wrohlich (2005), Work incentives and labor supply effects of the „Mini-Jobs Reform’ in Germany, in Empirica, 32, 91-116.
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