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Universal, Targeted or Both: Effects of Different Child Support Policies on Labour Supply and Poverty: A Simulation Study

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Bruckmeier, K., d’Andria, D., Wiemers, J. Universal, Targeted or Both: Effects of Different Child Support Policies on Labour Supply and Poverty: A Simulation Study. Journal of Contextual Economics – Schmollers Jahrbuch, 99999(), 1-48. https://doi.org/10.3790/schm.2024.372970
Bruckmeier, Kerstin; d’Andria, Diego and Wiemers, Jürgen "Universal, Targeted or Both: Effects of Different Child Support Policies on Labour Supply and Poverty: A Simulation Study" Journal of Contextual Economics – Schmollers Jahrbuch 99999., 2024, 1-48. https://doi.org/10.3790/schm.2024.372970
Bruckmeier, Kerstin/d’Andria, Diego/Wiemers, Jürgen (2024): Universal, Targeted or Both: Effects of Different Child Support Policies on Labour Supply and Poverty: A Simulation Study, in: Journal of Contextual Economics – Schmollers Jahrbuch, vol. 99999, iss. , 1-48, [online] https://doi.org/10.3790/schm.2024.372970
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Universal, Targeted or Both: Effects of Different Child Support Policies on Labour Supply and Poverty: A Simulation Study

Bruckmeier, Kerstin | d’Andria, Diego | Wiemers, Jürgen

Journal of Contextual Economics – Schmollers Jahrbuch, Vol. (2024), Online First : pp. 1–48

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Article Details

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Duncker & Humblot
DOI
https://doi.org/10.3790/schm.2024.372970
Language
Multiple languages
Pages
48
Keywords

Author Details

Kerstin Bruckmeier, Institute for Employment Research (IAB) Regensburger Strasse 104 90478 Nuremberg, Germany

Diego d’Andria, Schmalkalden University of Applied Sciences Blechhammer 9 98574 Schmalkalden, Germany

Jürgen Wiemers, Institute for Employment Research (IAB) Regensburger Strasse 104 90478 Nuremberg, Germany

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Abstract

We study a set of hypothetical reforms of child benefits in Germany using a static tax-benefit microsimulation model augmented with endogenous labour supply and take-up choices. We distinguish between a reform of the universal non-means-tested child benefit, a reform of the means-tested child benefit under the minimum income scheme, and a combination of both. The model simulates the impacts of the reforms on household income, poverty and labour supply. We find that improvements in the means-tested child benefit are well-targeted: They provide a high level of poverty reduction with a low fiscal impact at the cost of reduced labour supply incentives for low-income families. When unconditional benefits are increased, the effect on overall income inequality is more pronounced at the cost of reduced labour supply incentives for middle- and high-income families. Finally, when combined, the two approaches show synergies, particularly in the form of improved poverty reduction.

Table of Contents

Section Title Page Action Price
By Kerstin Bruckmeier, Diego d’Andria, and Jürgen Wiemers: Universal, Targeted or Both: Effects of Different Child Support Policies on Labour Supply and Poverty: A Simulation Study 1
1. Introduction 1
2. Institutional Background and Related Literature 3
3. Methodology and Data 6
4. Policy Scenarios 8
5. Results 10
5.1 Labour Supply Responses 11
5.2 Effects on Income Distribution and on Relative Poverty 14
5.3 Revenue Impact 18
6. Conclusion 21
References 22
A Appendix: Labour Supply Model 25
A.1 A Structural Model of Labour Supply and Welfare Participation 25
A.2 Labour Supply Model Estimation Results 27
B Appendix: Additional Tables and Figures 35
B.1 Additional Tables and Figures for Simulation Results Under Partial Take- up 35
B.2 Additional Tables and Figures for Simulation Results Under Full Take-up 38
C Appendix: Reform Effects Under a Balanced Budget 43

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