Subsidies on low skilled's social security contributions: the case of Belgium.

Belgium is characterised by a comparatively high tax wedge. Starting from the end of the 90’s there has been a growing concern over the effect of high labour costs on the employment of low skilled workers. One of the most innovative measures implemented by the federal government is the targeted reduction on social security contributions for low skilled workers: the Workbonus. The subsidy has increased steadily over the period 2000-2006. At the same time the eligibility to the benefit was considerably extended. The innovative feature of the tax credit is that - differently from other measure existing in OECD countries - eligibility is based on full-time equivalent earnings. The instrument therefore distinguishes between low skill and low effort and avoids the disincentive effect on labour supply at the intensive margin that is typically found in traditional measures means-tested on disposable income or earnings. This paper assesses the effects of the Workbonus on labour supply using different econometric frameworks. In particular, we compare estimates based on a traditional labour supply model, with results based on a modeling framework which accounts for heterogeneity in individuals’ job opportunities. Results show that accounting for demand side constraints leads to significantly lower estimates of labour supply effects. Nevertheless, the measure has a positive impact on labour supply and comparatively low cost per additional job created.Tax-benefit Systems; Microsimulation; Labour Supply; Structural Modeling;

Subsidies on low skilled's social security contributions: the case of Belgium

Belgium is characterised by a comparatively high tax wedge. Starting from the end of the 90’s there has been a growing concern over the effect of high labour costs on the employment of low skilled workers. One of the most innovative measures implemented by the federal government is the targeted reduction on social security contributions for low skilled workers: the Workbonus. The subsidy has increased steadily over the period 2000-2006. At the same time the eligibility to the benefit was considerably extended. The innovative feature of the tax credit is that - differently from other measure existing in OECD countries - eligibility is based on full-time equivalent earnings. The instrument therefore distinguishes between low skill and low effort and avoids the disincentive effect on labour supply at the intensive margin that is typically found in traditional measures means-tested on disposable income or earnings. This paper assesses the effects of the Workbonus on labour supply using different econometric frameworks. In particular, we compare estimates based on a traditional labour supply model, with results based on a modeling framework which accounts for heterogeneity in individuals’ job opportunities. Results show that accounting for demand side constraints leads to significantly lower estimates of labour supply effects. Nevertheless, the measure has a positive impact on labour supply and comparatively low cost per additional job created.Tax-benefit Systems – Microsimulation – Labour Supply – Structural Modeling.

Retirement in Non-Cooperative and Cooperative Families

Models that allow for non-cooperative as well as cooperative behavior of families are estimated on data from Norway in 1993 and 1994. The husband is eligible for early retirement while the wife is not. The models aim at explaining labor supply behavior of married couples the first twelve months after the husband became eligible for early retirement. Estimates and predictions derived from the different models are compared. Yet, no definite conclusion is reached with respect to what model is best at explaining the observed behavior. The models are employed to simulate the impacts on labor supply of taxing pension income the same way as labor income. We find that that this change of the tax system may reduce the propensity to retire early considerably.Family labor supply, retirement, econometric models, policy simulations

Predicting the path of labor supply responses when state dependence matters.

The standard labor supply model ignores possible inertia originating from individuals’ previous labor supply decisions and assumes immediate adjustments to policy reforms. In this study we develop a model where past labor market status have effects on present decisions: first, there is habit dependence in the taste for leisure; second, labor market opportunities reflect experiences of the previous period; and third, there is a disutility of deviating from the choice of last period (status quo). All these three components induce state dependence in labor supply behavior and gradual rather than immediate responses to tax and benefit reforms. The model is estimated with data of Norwegian females over the period 2003 - 2009. Simulation results from a tax rate change suggest that state dependence bring down the short-term (first-year) responses to one-third of the full effect, and the full effect is reached after about five years. Our results also suggest that the disutility of deviating from status quo, modeled as a fixed cost of switching, is the dominant driving force of sluggishness in labor supply responses.publishedVersio

Who and how many can work from home? Evidence from task descriptions

The Covid-19 crisis has forced great societal changes, including forcing many to work from home (WFH) in an effort to limit the spread of the disease. The ability to work from home has long been considered a perk, but we have few estimates of how many jobs are actually possible to be performed from home. This paper proposes a method to estimate the share of these jobs. For each occupation, we obtain a WFH friendly measure by asking respondents from Amazon Mechanical Turk (MTurk) to evaluate whether the corresponding tasks can be performed from home based on the descriptions from the International Standard Classification of Occupations 2008 (ISCO-08) standard. The share of WFH friendly jobs in an economy can then be estimated by combining these measures with the labor statistics on occupational employments. Using Norway as an illustrating example, we find that approximately 38% of Norwegian jobs can be performed from home. The Norwegian results also suggest that the pandemic and the government’s attempts to mitigate this crisis may have a quite uneven impact on the working population. Those who are already disadvantaged are often less likely to have jobs that can be performed from home.publishedVersio

Theoretical and Practical Arguments for Modeling Labor Supply as a Choice among Latent Jobs

Models of labor supply derived from stochastic utility representations and discretized sets of feasible hours of work have gained popularity because they are more practical than the standard approaches based on marginal calculus. In this paper we argue that practicality is not the only feature that can be addressed by means of stochastic choice theory. This theory also offers a powerful framework for developing a more realistic model for labor supply choices, founded on individuals having preferences over jobs and facing restrictions on the choice of jobs and hours of work. We discuss and clarify how this modeling framework deviates from both the conventional discrete approach (Van Soest, 1995), as well as the standard textbook approach based on marginal calculus (Hausman, 1985). It is argued that a model based on job choice opens up for a more realistic representation of the choice environment, and consequently offers the possibility of conducting a richer set of simulations of alternative policies.labor supply, random utility models, tax reform

Moving beyond expectations. From cohort-component to microsimulation projections

Population projections are predominantly made using the cohort-component method (CCM). The opportunities for further development within that framework are limited. Lately, with advances in technical and computational capacity, the microsimulation framework has become a serious contender. In contrast to CCM, it allows for rich com-plexity of behavior and provides insights on projection uncertainty. Still, demographers have been reluctant to apply this framework, which may be due to lack of guidance. We contribute by clarifying underlying CCM assumptions, translating a multi-regional version of the model into a dynamic spatial microsimulation model, and discuss the usefulness of prediction intervals for planning. Using data for Norway, we demonstrate that the re-sults for the two models are equivalent, even for very small subgroups, and converge with relatively few simulations. The model can easily be amended with additional indi-vidual heterogeneity, facilitating more accurate representations of population dynamics

Social security pension generosity and the effect on household saving

This paper examines the substitution between pension wealth and household saving by studying Norway’s 2011 pension reform. The analysis identifies the effect of reductions in social security pension generosity on household saving using cohort, time and sector variation in pension wealth induced by the reform. Our study focuses on saving behavior between ages 57-61 for the 1954- 1956 birth cohorts, who are the first three birth cohorts affected by a reduction in future pension wealth due to the reform. We find that they increased their saving rate around 1.2 percentage points (annually) after the reform, which corresponds to a five-year increase in household saving of about 27,000 NOK. When taking into account the remaining life-cycle changes to household saving, this corresponds to an offset effect of about 56 percent of the total loss in pension wealth.The authors gratefully acknowledges the Norwegian Ministry of Labor and Social Inclusion for funding through the PensjonsLAB program

Coupling mechanisms of displacement and imbibition in pore-fracture system of tight oil reservoir

Fracturing and water flooding have been popular technologies to achieve the effective development of tight oil reservoirs in recent years. However, in the late stage of production, the oil recovery rate declines with a rapid increase in the water cut. Water huff-puff could improve reservoir energy; however, the displacement and imbibition in the micro-nano pore throat and fracture systems are complex processes with unclear characteristics and position. Therefore, it is urgent to study the coupling mechanisms of oil-water displacement and imbibition in tight oil reservoirs. In this work, based on the phase field method of COMSOL Multiphysics software, we establish a two-dimensional microscopic numerical simulation model of the pore-fracture system, and carry out displacement-imbibition simulation programs of different injection media (water and surfactant) and injection methods (displacement, displacement-imbibition). By comparing the saturations and pressure distributions of different simulation programs, we analyze the changes in the oil-water interface, and summarize the action conditions of counter-current imbibition and pore throat limit. Finally, reasonable development suggestions are proposed for tight oil reservoirs.Cited as: Pi, Z., Peng, H., Jia, Z., Zhou, J, Cao, R. Coupling mechanisms of displacement and imbibition in pore-fracture system of tight oil reservoir. Capillarity, 2023, 7(1): 13-24. https://doi.org/10.46690/capi.2023.04.0

Økonomiske virkninger av to tiltak for likere lønn

Kvinnelige lønnstakere tjener i gjennomsnitt betydelig mindre enn menn. Regjeringen satte derfor ned et utvalg - Likelønnskommisjonen - som blant annet skulle vurdere hva som kan bidra til å redusere de systematiske forskjellene i timelønn. I denne studien rapporteres beregninger med mikrosimuleringsmodellen LOTTE-Arbeid og den makroøkonometrisk modellen MODAG som kaster lys over de økonomiske virkningene av to av tiltakene kommisjonen foreslår; innstramming i håndhevelsen av likelønnsbestemmelsen i Lov om likestilling mellom kjønnene og et likelønnsløft for kvinnedominerte yrker i offentlig sektor. Hvor mye lønnsgapet vil bli redusert av å skjerpe håndhevelsen av loven, kan vi ikke si noe om. Hvis det førte til full lønnsutjevning ved at kvinner får samme avkastning av utdanning og yrkeserfaring som menn uavhengig av sektor og bedrift, er den isolerte effekten på arbeidstilbudet i følge LOTTE-Arbeid en økning i kvinners arbeidstilbud med 4,0 prosent. Kvinners lønn ville da i gjennomsnitt øke med 18,8 prosent