Melanie Arntz

Analysing welfare reform in a microsimulation-AGE model: The value of disaggregation

We present a fully integrated microsimulation-AGE model that uses the labour market model PACE-L and data from the German Socio-Economic Panel. We use the model to analyse reform proposals designed to encourage labour force participation at the lower end of the wage distribution. A special focus of this paper is on comparing the fully disaggregated version of the model with more aggregated ones in order to pin down in which respects disaggregation can actually further our insights, and in which respects aggregation can be justified

Crowding out informal care? : evidence from a social experiment in Germany

This paper evaluates the effects of a professionally assisted consumer-directed program (Personal Budgets) compared to the standard home care programs of the German long-term care insurance. The evaluation makes use of a long-run social experiment at seven different sites with a random assignment into a treatment group receiving personal budgets and a control group in standard home care programs, i.e. an in-kind benefit (agency care) and cash payments. Compared to agency care personal budgets yield better care outcomes with regard to the overall support of formal and informal caregivers. In contrast, personal budgets do not improve care outcomes compared to the much less generous cash payments due to a strong crowding out of informal by formal care.

The Minimum Wage Affects Them All: Evidence on Employment Spillovers in the Roofing Sector

This paper contributes to the sparse literature on employment spillovers on minimum wages by exploiting the minimum wage introduction and subsequent increases in the German roofing sector that gave rise to an internationally unprecedented hard bite of a minimum wage. We look at the chances of remaining employed in the roofing sector for workers with and without a binding minimum wage and use the plumbing sector that is not subject to a minimum wage as a suitable benchmark sector. By estimating the counterfactual wage that plumbers would receive in the roofing sector given their characteristics, we are able to identify employment effects along the entire wage distribution. The results indicate that the chances for roofers to remain employed in the sector in eastern Germany deteriorated along the entire wage distribution. Such employment spillovers to workers without a binding minimum wage may result from scale effects and/or capital-labour substitution.

The Geographical Mobility of Unemployed Workers

Using a competing-risk framework of exiting unemployment to jobs in a local or a distant labor market area, this paper investigates whether unemployed individuals in West Germany choose search strategies that favor migrating out of declining regions. Moreover, the paper investigates how such search strategies are affected by the local accommodation of labor market programs. Such programs have been suggested to lead to a regional locking-in effect. Empirical results are obtained from a stratified Cox partial likelihood proportional hazards model that allows for location-specific fixed effects and are compared to estimates from a parametric log-logistic hazard model that takes account of unobserved individual heterogeneity. The findings indicate that unemployed in West Germany are responsive to local labor market conditions and are more likely to leave regions with unfavorable re-employment opportunities. No locking-in effect from labor market programs is found. The probability of migration is found to increase with search time.

Can Regional Employment Disparities Explain the Allocation of Human Capital Across Space

Arntz M., Gregory T. and Lehmer F. Can regional employment disparities explain the allocation of human capital across space, Regional Studies. This paper examines the determinants of skill-selective regional migration in a context where modelling the migration decision as a wage-maximizing process may be insufficient due to persistent employment disparities. Based on a Borjas-type framework it is shown that high-skilled workers are disproportionately attracted to regions with higher mean wages and employment chances as well as higher regional wage and employment inequalities. Estimates from a labour flow fixed-effects model and a general methods of moments (GMM) estimator show that these predictions hold, but only employment disparities induce a robust and significant skill sorting. The paper thus establishes a missing link about why employment disparities may actually be self-reinforcing.

Alternative approaches to discrete working time choice in an AGE framework

We compare two options of integrating discrete working time choice of heterogenous households into a general equilibrium model. The first, known from the literature, produces household heterogeneity through a working time preference parameter. We contrast this with a model that directly incorporates a logit discrete-choice approach into a AGE framework. On the grounds of both calibration consistency and adequate accomodation of within-household interaction, we argue that the logit approach is preferable.

Unequal pay or unequal employment? : What drives the skill-composition of labor flows in Germany?

This paper examines the determinants of gross labor flows in a context where modeling the migration decision as a wage-maximizing process may be inadequate due to regional wage rigidities that result from central wage bargaining. In such a context, the framework that has been developed by Borjas et al. (1992) on the selectivity of internal migrants with respect to skills has to be extended to allow migrants to move to regions that best reward their skills in terms of both wages and employment. The extended framework predicts skilled workers to be disproportionately attracted to regions with higher mean wages and employment rates as well as higher regional wage and employment inequalities. Estimates from a labor flow fixed effects model and a GMM estimator show that these predictions hold, but only the effects for mean employment rates and employment inequality are robust and significant. The paper may thus be able to explain why earlier attempts to explain skill selectivity in Europe within a pure wage-based approach failed to replicate the US results.

Are Personal Budgets a Financially Sound Reform Option for the German Long-Term Care Insurance?

Summary In a long-run social experiment, personal budgets have been tested as an alternative home care program of the German long-term care insurance (LTCI). By granting the monetary value of in kind services in cash, personal budgets are considered to enable customized home care arrangements, thereby avoiding costly nursing home care and thus saving LTCI spending. However, personal budgets also compete with the already existing and less generous cash option of the LTCI. Any transition from the receipt of cash benefits to personal budgets thus challenges the view of personal budgets as a cost savings device, unless personal budgets sufficiently reduce the use of costly nursing home care to balance these extra costs. This paper therefore contrasts the short-term costs of implementing personal budgets with potential cost savings if personal budgets enhance the stability of home care and avoid costly nursing home care. For this purpose, the paper investigates the effects of personal budgets on the duration of home care until moving to a nursing home as well as the perceived stability of home care. Despite a positive effect of personal budgets on the stability of home care, LTCI spending is likely to increase in the short to medium run. In the long run, however, the expected transition to decreasing numbers of cash recipients favors the introduction of personal budgets.

Map Intersection Based Merging Schemes for Administrative Data Sources and an Application to Germany

In many situations the applied researcher wants to combine different data sources without knowing the exact link and merging rule. This paper introduces a theoretical framework how two different regional administrative data sources can be merged. It presents different merging schemes based on the area size of intersections between both regional entities. Estimates of intersection areas are derived from a digital map intersection. The theoretical framework derives conditions for the unbiasedness of estimated intersections and merging rules. The paper also presents conditions under which the choice of merging rule does not matter and illustrates the theoretical results with a simulation study. An application to German counties and federal employment office districts illustrates the applicability of the approach. It delivers merging schemes for regional data sources of the federal German statistical office and of the federal German employment office.

Weather‐Related Employment Subsidies as a Remedy for Seasonal Unemployment? Evidence from Germany

Many European countries try to reduce seasonal unemployment by subsidizing short‐time employment during the winter period. Despite such costly efforts, pronounced seasonal unemployment patterns continue to exist. This puts doubts on the effectiveness of such policy interventions. This paper provides a first empirical assessment of the effectiveness of different subsidy schemes by exploiting the institutional variation in a German subsidy scheme that applies to the construction sector and the variation in local weather and business cycle conditions across 20 years. The findings confirm that generous short‐time subsidies reduce individual lay‐off probabilities in the case of poor weather conditions. However, the link between weather conditions and seasonal lay‐offs is much less strong than expected, making planned capacity reductions the main suspect for causing seasonality in unemployment patterns.