Modelling Welfare State Reform

Modelling Welfare State Reform

1st Edition - February 12, 1983

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  • Authors: G.M.M. Gelauff, J.J. Graafland
  • eBook ISBN: 9781483295558

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In order to analyze the economic effects of various policy proposals for reforming the welfare state a model has been developed called MIMIC. The structure of this model is presented in the first part of this book. The model combines various modern labour market theories with a detailed description of relevant labour market institutions in an applied general equilibrium context. The second part of the volume contains an elaborate presentation of the simulation results of MIMIC, such as various tax policies, a reduction in benefits or the official minimum wage, individualization of the tax and social security system and the introduction of negative income tax. The model has proved to be a unique instrument for policy evaluation for the Netherlands.

Table of Contents

  • Preface. 1. Purpose and Method. Introduction. Applied general equilibrium models. Methodological aspects of MIMIC. An overview of the model structure of MIMIC. Comparison of MIMIC with other applied general equilibrium models. Outline of the study. The Structure of MIMIC. 2. The model of the firm. Output market environment. Input market environment. Production structure of individual firm. Firm behaviour. Calibration of the model of the firm. Appendix 2.A. Cumulated production structure matrix, imports and indirect taxes. 3. The model of household behaviour. The household sector. Labour supply. Calibration of the household model. 4. Matchings, search strategy of unemployed and contractual wage formation. Search behaviour of unemployed persons. The matching process. Contractual wage formation. Calibration. 5. The public sector. Modelling of the public sector. The 1992 system of income taxes and social security premiums. 6. Links between model blocks. The model of the firm. The household model. The matching model. The wage model. The public sector model. Policy Simulations. 7. The base projection. Projected development of exogenous variables. Selected outcomes of base projection. 8. Income tax instruments. Simulations on single tax parameters. Replacing the basic allowance by a tax credit. The "Laffer" curve. 9. Reform of the income tax system. Income tax reform in OECD countries. The 1990 income tax reform in The Netherlands. Further income tax reform: the Stevens proposals. 10. Cutting back the welfare state. International comparison of social security systems. Minimum wages. Unemployment benefits. Disability benefits. Combined effects of reduction of labour market related social benefits and minimum wage. 11. Individualizing the income tax and social security system. Marriage relief and unemployment benefits in the OECD. Individualizing the tax system by cancelling the marriage relief. Individualizing government assistance. 12. Introduction of a negative income tax. Possible advantages and disadvantages of a negative income tax. Results of NIT experiments in the USA. The effects of a negative income tax in MIMIC. A negative income tax in a mini welfare state. 13. Evaluation. Policy simulations: relevance. Model structure: consistency and adequacy. References. Name index.

Product details

  • No. of pages: 307
  • Language: English
  • Copyright: © North Holland 1994
  • Published: February 12, 1983
  • Imprint: North Holland
  • eBook ISBN: 9781483295558

About the Authors

G.M.M. Gelauff

J.J. Graafland

Affiliations and Expertise

Centraal Planbureau, The Hague, The Netherlands

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