Egbert Jongen

Heterogeneity in Labour Supply Responses: Evidence from a Major Tax Reform

We use a large and rich administrative household panel data set to estimate labour supply responses for a large number of subgroups in the Netherlands. The identification of the parameters benefits from a major tax reform in the data period. We uncover large differences in behavioural responses. In particular, we find differences in labour supply responses between households with and without children that are much bigger than suggested by previous studies that had to pool these household types in the estimation of preferences. An efficient tax-benefit system should take the substantial heterogeneity in behavioural responses into account.

What can we expect from subsidies for the long-term unemployed?

What can we expect from subsidies for the long-term unemployed? According to Snower (1994a) unemployment would fall dramatically. Furthermore, the subsidy scheme would pay for itself. In this paper we argue that the impact on unemployment is more likely to be limited and is unlikely to constitute a ‘free lunch.’ We present an adapted version of MIMIC where we model the distinction between short and long-term unemployment explicitly. Simulation results on subsidies for the long-term unemployed are in line with the findings of microlevel studies on actually implemented subsidy schemes for the long-term unemployed. The simulation results are in contrast with Snowers analysis.

Microdata and Policy Evaluation at CPB

The role of microdata and policy evaluation has become more important over time at CPB Netherlands Bureau for Economic Policy Analysis. CPB’s value added is the focus on the Dutch context: the data, the underlying institutions and the research topics. This chapter provides four examples of microeconometric research at the CPB: labour participation of parents with young children, tax shifting by small corporations, teacher quality and student achievement and performance-based pay in mental health care. In these examples, CPB combines the strengths of structural models and policy evaluation models with large datasets. Next to this research, the importance of good communication strategies to policy-makers is emphasized.

Tax-Benefit Reforms and Structural Models for Labour Supply

This chapter exploits a very large administrative dataset on Dutch households to estimate labour supply elasticities for subgroups on the Dutch labour market. The estimated preferences are subsequently used to simulate the labour supply effects of potential reforms. It turns out that childless singles and men in couples hardly respond to changes in financial incentives, whereas single parents and women in couples with young children are quite responsive. Most of the response is in the number of persons employed, not in the response in hours worked per week per employed, while cross-elasticities for women in couples are non-negligible.