ZEW Workshop "Recent Developments in Behavioural Microsimulation"

At the beginning of December 2010, ZEW organised a two-day workshop on recent developments in behavioural microsimulation. Thirty-five researchers from Germany and abroad took the opportunity to discuss recent developments in this field.

Prof. Richard Blundell (University College London and Institute for Fiscal Studies), the workshop’s keynote speaker, presented the most important findings of Mirrlees Review, a large-scale project, in which the characteristics of a good fiscal system were identified by numerous international experts.

Moreover, the workshop also focused on family economics as there is an increasing need for economic policy advising in this field. ZEW is currently conducting an evaluation of 13 marital and family-related benefits in Germany using microsimulation. This evaluation was commissioned by the German Ministry of Family Affairs and the German Ministry of Finance.

Katharina Wrohlich (DIW Berlin), Alexander Bick (Goethe University Frankfurt) and Egbert L.W. Jongen (CPB Den Haag) dealt with different methodological perspectives regarding the relation between child care and women’s employment. Arthur van Soest (University Tilburg) investigated the tax-transfer system’s impact on the allocation of housework. Another two contributions indicated the generally high methodological level of the workshop, in particular with regard to behavioural modelling: Marco Cosconati (Banca d’Italia) presented a model of the impact of education on human capital formation. Andreas Steinhauer (University Zurich) linked the ex- post evaluation of parental leave regulations to a structural model of job search.

Furthermore, some contributions were devoted to general methodological issues. Philippe Liégeois (CEPS/INSTEAD Luxembourg) presented a method for using negative marginal utility in discrete choice models. Andreas Peichl (IZA Bonn) and Sebastian Siegloch (IZA Bonn) dealt with a comparative analysis of labour supply elasticity and the integration of labour demand in microsimulation models. Jürgen Wiemers (IAB Nürnberg) presented an analysis on whether the claiming of social benefits has changed after the German Hartz-IV reforms.

Various papers presented at the workshop linked microsimulation models with a life cycle approach to analyse the design of the tax-transfer system with regard to demographic change (Peter Haan, Goethe-University Frankfurt), immigrants’ net contribution to social security system (Murat G. Kirdar, Technical University Ankara), or private capital formation (Simone Tedeschi, University Modena).

Papers by Daniela Glocker (DIW Berlin), who analysed the impact of tuition fees, and David Philipps (IFS London), who analysed the impact of food prices on household consumption in Mexico and also provided a short insight in microsimulation research conducted at IFS London, indicated the large scope of microsimulation.

Contact: Dr. Holger Stichnoth

Microsimulation is an important tool in policy advising and is used in various projects at ZEW. These projects are usually commissioned by German Federal Ministries or councils such as the German Council of Economic Experts. Microsimulation combines individual or household data with economic models to predict the impacts of political measures. Behavioural microsimulation factors take into account that households react to changing conditions, e.g. by expanding or restricting their labour supply after a reform of the tax- transfer system.