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Heterogeneous labour markets in a Microsimulation-AGE Model : Application to welfare reform in Germany


Boeters, Stefan ; Feil, Michael

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URL: https://madoc.bib.uni-mannheim.de/2105
URN: urn:nbn:de:bsz:180-madoc-21052
Document Type: Working paper
Year of publication: 2008
The title of a journal, publication series: ZEW Discussion Papers
Volume: 08-043
Place of publication: Mannheim
Edition: Version Oktober 2008
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: J51 , J22 , D58,
Subject headings (SWD): Hartz-Reform , Wirtschaftspolitik , Arbeitsangebot , Arbeitsmarktsegmentierung , Berufliche Qualifikation , Mikrosimulation , Deutschland
Keywords (English): Applied general equilibrium model , microsimulation , discrete working time choice , heterogeneous labour markets , labour market reform
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.

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