The study investigates to what extent key measures of family related policy in Germany contribute to economic stability of households and to reconciliation of family and work. The comparative assessment is based on a behavioral micro simulation model that accounts for the interactions between the various policy measures and for labor supply responses. The parameters of the model are estimated using data from the Socio-economic Panel. The results indicate that in total, family related measures contribute substantially to family income. In terms of efficiency, targeted measures outperform transfers through large-scale programmes such as child benefits or income tax splitting. Income tax splitting and coinsurance of spouses furthermore have negative incentive effects on the labour supply of secondary earners. Generally, many of the effects are found to be non-linear, asymmetric and non-additive. As a consequence, the ex ante evaluation of reform proposals cannot rely on an extrapolation of existing results, but has to be based on concrete simulations for each particular reform.

Authors

Bonin, Holger
Schnabel, Reinhold
Stichnoth, Holger

Keywords

Behavioral Microsimulation, Family Policy, Germany