Reforming social welfare in Germany

Abstract

"This paper analyses the e?ects of a social assistance reform in Germany. In contrast to studies which are based on microsimulation methods we use a computable general equilibrium model which incorporates a discrete choice model of labour supply to simulate a variety of reform scenarios. The main contribution is that we are able to identify general equilibrium e?ects of a reform on wages and unemployment. The simulation results show that general equilibrium wage reactions tend to mitigate labour supply e?ects. Moreover, the simulations indicate that substantial employment e?ectsare tobe expected only from major cuts in welfare payments." (Author's abstract, IAB-Doku) ((en))

Cite article

Boeters, S., Gürtzgen, N. & Schnabel, R. (2003): Reforming social welfare in Germany. An applied general equilibrium analysis. (ZEW discussion paper 2003-70), Mannheim, 28 p.