Labour Market Responses of Survival Pensioners: Estimating a Labour Supply Model and Predicting the Effect of the Reform

Abstract

In this paper we use a sample of administrative data coming from the 'Dataware-house labour market and social protection' and the microsimulation model MIMOSIS to assess the labour supply effects of a reform of the rules for cumulating labour income with survival pension as proposed in the Generations Pact. In a first step we estimate a standard discrete choice labour supply model for several sub groups. Subsequently we model the proposed reform in the tax and benefit rules and we predict the change in desired labour supply of the targeted group. The reform has a significant positive effect on the labour supply of widows, but the effects are quite weak amongst the survivor pensioner with very low benefit, i.e. the group that was originally thought to benefit the most from the reform.

Keywords: Tax-benefit Systems, Microsimulation, Household Labour Supply

JEL Classification: C25, D31, H21, H23, H24, H31, J22