Comparative Welfare Analysis of German Public Policies
DOI:
https://doi.org/10.46851/82Abstract
This paper implements the comparative welfare analysis method Marginal Value of Public Funds (MVPF) developed by Hendren and Sprung-Keyser (2020) for historical public policies in Germany between 1990–2018 across the domains of taxation, job training, social insurance, and infrastructure. It contributes to the public finance literature by constructing among the first MVPF collections of public policies outside the United States, identifying key similarities and differences between MVPF results of the two nations, expanding the MVPF framework into the field of public infrastructure, and shedding light on the approach’s particular weaknesses. German tax reforms generated positive and significant MVPFs; retirement and unemployment insurance policies yielded relatively small MVPFs, and child treatment scored the largest MVPF among health insurance programs.
 Keywords: public policy, policy evaluation, welfare analysis
JEL : H21, H41, H50, I38
References
Athey, S., & Wager, S. (2021). Policy learning with observational data. Econometrica, 89(1), 40. https://doi.org/10.3982/ECTA15732
Atkinson, A. B., Piketty, T., & Saez, E. (2011). Top Incomes in the Long Run of History. Journal of Economic Literature, 49(1), 3–71. https://doi.org/10.1257/jel.49.1.3
Auerbach, A. J., & Hines, J. R. (2002). Taxation and Economic Efficiency. In Handbook of Public Economics (Vol. 3, pp. 1347–1421). Elsevier. https://doi.org/10.1016/S1573-4420(02)80025-8
Autorengruppe Bildungsberichterstattung. (2020). Bildung in Deutschland 2020. wbv Media. https://doi.org/10.3278/6001820gw
Baksa, D., Munkacsi, Z., & Nerlich, C. (2020). A Framework for Assessing the Costs of Pension Reform Reversals. IMF Working Papers, 20(132). https://doi.org/10.5089/9781513550497.001
Bernhard, S. (2016). Berufliche Weiterbildung von Arbeitslosengeld-II-Empfängern. Langfristige Wirkungsanalysen. Sozialer Fortschritt, 65(7), 153–161. https://doi.org/10.3790/sfo.65.7.153
Bock, J.-O., Heider, D., Matschinger, H., Brenner, H., Saum, K.-U., Haefeli, W. E., & König, H.-H. (2016). Willingness to pay for health insurance among the elderly population in Germany. The European Journal of Health Economics, 17(2), 149–158. https://doi.org/10.1007/s10198-014-0663-8
Boersch-Supan, A., & Juerges, H. (2011). Disability, Pension Reform and Early Retirement in Germany (No. w17079; p. w17079). National Bureau of Economic Research. https://doi.org/10.3386/w17079
Boersch-Supan, A., & Schnabel, R. (1998). Social Security and Declining Labor-Force Participation in Germany. American Economic Review, 88, 7.
Bönke, T., Kemptner, D., & Lüthen, H. (2018). Effectiveness of Early Retirement Disincentives. Labour Economics, 32.
Diamond, P., & Saez, E. (2011). The Case for a Progressive Tax: From Basic Research to Policy Recommendation. Journal of Economic Perspectives, 25(4), 165–190. https://doi.org/10.1257/jep.25.4.165
Doerrenberg, P., Peichl, A., & Siegloch, S. (2017). The elasticity of taxable income in the presence of deduction possibilities. Journal of Public Economics, 151, 41–55. https://doi.org/10.1016/j.jpubeco.2015.10.001
Finkelstein, A., & Hendren, N. (2020). Welfare Analysis Meets Causal Inference. Journal of Economic Perspectives, 34(4), 146–167. https://doi.org/10.1257/jep.34.4.146
Gahvari, F. (2006). On the marginal cost of public funds and the optimal provision of public goods. Journal of Public Economics, 90(6-7), 1251-1262. https://doi.org/10.1016/j.jpubeco.2005.11.001
Gesundheitsberichterstattung des Bundes. (2021). Gesundheitsausgaben in Deutschland. Statistisches Bundesamt. https://www.gbe-bund.de/gbe/pkg_olap_tables.prc_set_hierlevel?p_uid=gast&p_aid=76630471&p_sprache=D&p_help=2&p_indnr=863&p_ansnr=51503225&p_version=2&p_dim=D.733&p_dw=4438&p_direction=drill. Accessed on March 26th, 2021, 21:58.
Gottfried, & Witczak. (2009). The responses of taxable income induced by tax cuts: Empirical evidence from the German taxpayer panel. IAW-Diskussionspapiere, 57. http://hdl.handle.net/10419/39211
Hajek, A., Enzenbach, C., Stengler, K., Glaesmer, H., Hinz, A., Röhr, S., Stein, J., Riedel-Heller, S. G., & König, H.-H. (2020). Determinants of Willingness to Pay for Health Insurance in Germany—Results of the Population-Based Health Study of the Leipzig Research Centre for Civilization Diseases (LIFE-Adult-Study). Frontiers in Public Health, 8, 456. https://doi.org/10.3389/fpubh.2020.00456
Hamilton, D., Dee, A., & Perry, I. J. (2018). The lifetime costs of overweight and obesity in childhood and adolescence: A systematic review: Lifetime costs of childhood obesity. Obesity Reviews, 19(4), 452–463. https://doi.org/10.1111/obr.12649
Harrer, T., & Stockinger, B. (2019). Ein-Euro-Jobs nach der Instrumentenreform 2012: Zielgruppe besser erreicht – erste Ergebnisse zur Wirkung. IAB-Kurzbericht, 22, 8.
Heckman, J. J., Moon, S. H., Pinto, R., Savelyev, P. A., & Yavitz, A. (2010). The rate of return to the HighScope Perry Preschool Program. Journal of Public Economics, 94(1–2), 114–128. https://doi.org/10.1016/j.jpubeco.2009.11.001
Hendren, N., & Sprung-Keyser, B. (2020). A Unified Welfare Analysis of Government Policies*. The Quarterly Journal of Economics, 135(3), 1209–1318. https://doi.org/10.1093/qje/qjaa006
Hendren, N., & Sprung-Keyser, B. (2022). The Case for Using the MVPF in Empirical Welfare Analysis. NBER Working Paper 30029. https://www.nber.org/papers/w30029
Höffler, F. (2007). Cost and benefits from infrastructure competition. Estimating welfare effects from broadband access competition. Telecommunications Policy, 31(6–7), 401–418. https://doi.org/10.1016/j.telpol.2007.05.004
Kesztyüs, D., Lauer, R., Kesztyüs, T., Kilian, R., Steinacker, J. M., & on behalf of the “Join the Healthy Boat†Study Group. (2017). Costs and effects of a state-wide health promotion program in primary schools in Germany – the Baden-Württemberg Study: A cluster-randomized, controlled trial. PLOS ONE, 12(2), e0172332. https://doi.org/10.1371/journal.pone.0172332
Kesztyüs, D., Lauer, R., Schreiber, A. C., Kesztyüs, T., Kilian, R., & Steinacker, J. M. (2014). Parents’ willingness to pay for the prevention of childhood overweight and obesity. Health Economics Review, 4(1), 20. https://doi.org/10.1186/s13561-014-0020-8
Kitagawa, T., & Tetenov, A. (2018). Who should be treated? Empirical Welfare Maximization methods for treatment choice. Econometrica, 86(2), 591–616. https://doi.org/10.3982/ECTA13288
Kopczuk, W. (2005). Tax bases, tax rates and the elasticity of reported income. Journal of Public Economics, 89(11–12), 2093–2119. https://doi.org/10.1016/j.jpubeco.2004.12.005
Krolage, C. (2020). Essays in Empirical Public Economics. LMU.
Lalive, R., Luechinger, S., & Schmutzler, A. (2013). Does Supporting Passenger Railways Reduce Road Traffic Externalities? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2212735
Lauer, R., Traub, M., Hansen, S., Kilian, R., Steinacker, J. M., & Kesztyüs, D. (2020). Longitudinal changes and determinants of parental willingness to pay for the prevention of childhood overweight and obesity. Health Economics Review, 10(1), 15. https://doi.org/10.1186/s13561-020-00266-z
Lechner, M., Miquel, R., & Wunsch, Conny. (2011). Longrun effects of public sector sponsored training in West Germany. Journal of the European Economic Association, 9(4), 742–784.
Lüthen, H. (2016). Rates of Return and Early Retirement Disincentives: Evidence from a German Pension Reform. German Economic Review, 17(2), 206–233. https://doi.org/10.1111/geer.12070
Mirrlees, J. A. (1971). An Exploration in the Theory of Optimum Income Taxation. The Review of Economic Studies, 38(2), 175. https://doi.org/10.2307/2296779
Pigou, A. C. (1920). The Economics of Welfare.
Saez, E., Slemrod, J., & Giertz, S. H. (2012). The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review. Journal of Economic Literature, 50(1), 3–50. https://doi.org/10.1257/jel.50.1.3
Saez, E., & Stantcheva, S. (2016). Generalized Social Marginal Welfare Weights for Optimal Tax Theory. American Economic Review, 106(1), 24–45. https://doi.org/10.1257/aer.20141362
Schellhorn, & Gottfried. (2004). Empirical Evidence on the Effects of Marginal Tax Rates on Income: The German Case. IAW-Diskussionspapiere, 15. http://hdl.handle.net/10419/21854
Schmidt, T.-P., & Müller, H. (2012). Die Elastizität des zu versteuernden Einkommens in Deutschland. Arqus Discussion Paper, 142, 36. http://dx.doi.org/10.2139/ssrn.2088106
Schmieder, J. F., & von Wachter, T. (2016). The Effects of Unemployment Insurance Benefits: New Evidence and Interpretation. Annual Review of Economics, 8(1), 547–581. https://doi.org/10.1146/annurev-economics-080614-115758
Schmieder, J. F., & von Wachter, T. (2017). A Context-Robust Measure of the Disincentive Cost of Unemployment Insurance. American Economic Review, 107(5), 343–348. https://doi.org/10.1257/aer.p20171026
Schmieder, J. F., Wachter, T. V., & Bender, S. (2012). The effects of extended unemployment insurance over the business cycle: Evidence from regression discontinuity estimates over 20 years. Quarterly Journal of Economics, 52. https://doi.org/10.1093/qje/qjs010
Slesnick, D. T. (1998). Empirical Approaches to the Measurement of Welfare. Journal of Economic Literature, 36(4), 59. https://www.jstor.org/stable/2565048
Statistisches Bundesamt. (2021). Vierteljährliche Kassenergebnisse des Öffentlichen Gesamthaushalts (No. 2140200203234; Fachserie 14). Statistisches Bundesamt.
Vooren, M., Haelermans, C., Groot, W., & Maassen van den Brink, H. (2019). The effectiveness of active labor market policies: A meta-analysis: the effectiveness of active labor market policies: a meta-analysis. Journal of Economic Surveys, 33(1), 125–149. https://doi.org/10.1111/joes.12269
Werdt, C. (2015). The elasticity of taxable income for Germany and its sensitivity to the appropriate model (No. 2015/5; Diskussionsbeiträge). http://hdl.handle.net/10419/106825
Ye, H. (2018). Essays on the economics of unemployment and retirement [Thesis (PhD)]. Boston University.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Journal of Business and Political Economy : Biannual Review of The Indonesian Economy
This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.
