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Research Seminar Series

For questions and suggestions regarding the series, please contact prof. dr. Olaf van Vliet or dr. Max van Lent

Redistributive effects of Dutch carbon mitigation policies: Who bears the burden of our energy transition (Emma Schell)

Wednesday 10 July, 14:00-15:00, Kamerlingh Onnes Building, room C0.14

Next Wednesday (10 July) we have a seminar by Emma Schell, in room C0.14, 14.00-15.00. She will present her first paper with the title: "Redistributive effects of Dutch carbon mitigation policies: Who bears the burden of our energy transition."  We hope to see you at the seminar.


Health shocks and household allocation of time and spending (joint work with Ross Hickey, Ted McDonald, Eric Sun, and Yuting Zhang).

Thurday 4 July, 14:00-15:00, Kamerlingh Onnes Building, room B2.M07

Using the Household Income and Labour Dynamics in Australia data, we study changes in household allocation of time and spending when a family member experiences a health shock. Applying an event study design, we document that health shocks increase household expenditures and time spent in home production activities that are complements for healing and reduce those that are substitutes. Medical expenditures and spousal caregiving time rise; while spending on alcohol, a good that detracts from healing, declines. Labour supply of the ill person decreases at both the intensive and extensive margin. As the ill person’s labour supply declines, we find an increase in consumption of complements for staying at home, such as spending on household utilities and time for housework by the unaffected spouse. Although
the fall in earnings is partially offset by worker compensation and social security payments, the inability to cut total spending results in a higher proportion of individuals reporting financial stress.


Interventions on study success in higher education (Joram van Ketel)

Wednesday 3 July, 15:15-16:15, Kamerlingh Onnes Buidling, room B0.14

In this PhD we study methods to increase study success in higher education through interventions in the domain of students’ skill development and engagement. The methodological aim is to complement the existing literature with field experiments in ongoing higher education, with relevant outcome measures of study success. In the first project we implement a guest-lesson in the curriculum of the Bachelor of Law. Tutorgroups in some study tracks receive one of three different versions: a lesson on general wellbeing, social fit in the tutorgroup, or goal-oriented studying. Challenges for first-generation students are taken as primary inspiration for all versions. The second project evaluates the effect of an instructional method that assumes and fosters autonomous learning in a statistics course in the Bachelor of Psychology. Specifically, we aim to investigate whether differences in prior skill can create inequality in the effect of such an intervention.

Interventions on study success in higher education

Wednesday 26 June, 15:15 - 16:15, Kamerlingh Onnes Buidling, room B0.41

In this PhD we study methods to increase study success in higher education through interventions in the domain of students’ skill development and engagement. The methodological aim is to complement the existing literature with field experiments in ongoing higher education, with relevant outcome measures of study success.

In the first project we implement a guest-lesson in the curriculum of the Bachelor of Law. Tutorgroups in some study tracks receive one of three different versions: a lesson on general wellbeing, social fit in the tutorgroup, or goal-oriented studying. Challenges for first-generation students are taken as primary inspiration for all versions.

The second project evaluates the effect of an instructional method that assumes and fosters autonomous learning in a statistics course in the Bachelor of Psychology. Specifically, we aim to investigate whether differences in prior skill can create inequality in the effect of such an intervention.

Seminar: Renren Gan will present her first paper: "Child Penalty in the Netherlands Over Three Decades”

Wednesday 12 June, 15:15 - 16:15, Kamerlingh Onnes Building, room B0.16

Seminar: Larissa de Lima Almeida

Wednesday 5 June, 15:15 - 16:15, Kamerlingh Onnes Building, room B0.41

De-Routinization in the Fourth Industrial Revolution -Firm-Level Evidence

Wednesday 15 May, 15:15 - 16:15, Kamerlingh Onnes Buidling, room B0.41, Sabrina Genz (UU)

This paper examines the extent to which aggregate-level de-routinization can be attributed to firm-level technology adoption during the most recent technological expansion. Leveraging

administrative data and a novel firm survey, we distinguish frontier technologies from older technologies. We find that adopters of frontier technologies contribute substantially to deroutinization.

However, this is driven only by a subset of these firms: large adopters replace routine jobs, and less routine-intensive adopters experience accelerated growth. These scale and composition effects reflect firms’ readiness for frontier technology adoption. Our results suggest that expediting technology adoption would accelerate de-routinization and increase between-firm heterogeneity.

The Demand for Commitment using Banking Products: A Proposal for an Experiment (joint work with Marion Collewet, Rosalinde Kessels, and Marike Knoef)

Wednesday 24 April, 15:15 - 16:15, Kamerlingh Onnes Building, room B0.41, Max van Lent

A large fraction of rich societies is financially unhealthy, while in principle having a sufficiently high income. This is partly caused by unconscious spending. In this study we propose (attributes of) banking products that aim to help people to overcome unconscious spending using various sorts of commitment. Using a discrete choice experiment we estimate consumer demand for banking products containing commitment mechanisms. We aim to estimate possible heterogeneity between people with different demographics, financial positions, and social-, time- and risk preferences. This study paves the way for financial institutions to offer products that help consumers to spend consciously and improve financial health.


Seminar: Ashley Wong (TiU)

Wednesday 10 April, 15:15- 16:15, Kamerlingh Onnes Building, room B0.41

Seminar: Cindy Biesenbeek (DNB)

Wednesday 3 April, 15:15 - 16:15, Kamerlingh Onnes Buildign. room A0.14

Pension systems prevent poverty and allow individuals to maintain their consumption to a certain extent after retirement. The Dutch pension system scores high on average replacement rates and poverty among the elderly is very low. However, this is not the case for everyone. We study retirement savings in the Netherlands in 2022 using a large administrative dataset. We use a comprehensive approach developed by Knoef et al. (2016) that takes public and private pensions, as well as private savings and housing wealth into account. Our dataset includes 4.4 million households and allows for a detailed study of the heterogeneity within retirement savings. We find gross median replacement rates from public and private pensions ranging from 0.94 for the lowest income decile to 0.42 for the highest income decile. Replacement rates are relatively low for migrants, the self-employed and employees in ICT.


The Net Fiscal Position of Immigrants in the Netherlands

Wednesday 27 March, 15:15 - 16:15, Kamerlingh Onnes Building, room B0.41, Corné van Rhee

To help alleviate the systematic underestimation of the fiscal contributions made by immigrants, we calculate the net fiscal position of immigrants in the Netherlands over the period from 2011 to 2021. We use administrative data on the entire population, making our estimations more reliable than previous studies. In addition, we can more accurately identify immigrant sub-populations, distinguishing between migration motives, backgrounds, and generations. Our estimations are done by apportioning the total government revenues and expenditures to every individual according to apportioning criteria. These are calculated using tax records, declarations of health costs and education enrollment data. Preliminary results indicate that migrants from western countries have a similar net fiscal positions as natives. Immigrants from non-western countries tend to have a smaller positive net fiscal impact, which is only negative in years of large budget deficits. For both western and non-western immigrants, the net fiscal position improves from the first to the second generation. When distinguishing between migration motive, labor migrants are the biggest net fiscal contributors, but family and study migrants also have a positive net fiscal position in years of economic upturn. Only irregular migrants are consistent net fiscal recipients.

Seminar: Sabrina Genz (UU)

Wednesday 20 March, 15:15 - 16:15

Household Wealth and its Distribution in the Netherlands, 1854–2019 (joint work with Amaruy de Vicq, Michail Moatsos and Tim van der Valk)

Wednesday 13 March, 15:15 - 16:15, Kamerlingh Onnes Building, room A0.14, Simon Toussaint (UU)

We analyze the evolution of aggregate household wealth, its composition, and top wealth shares since the mid-19th century for the Netherlands, a country which played a significant role in economic history. The main forces at play are the size and variation of colonial wealth up until WWII, and the introduction of a –particularly strong– pension system thereafter. We show that the wealth-income ratio followed the familiar U-shaped pattern over the 20th century. The Netherlands, however, had the largest wealth-income ratio on record, growing since the mid-1850s, driven by industrialization and booming private foreign investments, to a peak of 900% around 1880. In contrast to other countries, the wealth-income ratio remained high up until 1929. To better understand these trends, we construct the first series on colonial wealth and show that colonial and other foreign investment account for most of the gap with other countries in the pre-WWII period. The initial post-war decline in the ratio is driven by rapid income growth. The increase in the ratio since the 1970s has been mainly driven by the uniquely large capital-funded pension system. In contrast with other major countries, housing plays only a secondary role in net wealth accumulation due to significant mortgage debt. Methodologically, we are the first to compare historical national accounts, estate multiplier, and wealth tax data approaches to construct aggregate wealth. We find that the estate multiplier is a good alternative to the historical national accounts benchmark, while the use of wealth tax data results in unrealistically low estimates.


Seminar: Eduard Suari-Andreu

Wednesday 6 March, 15:15 - 16:15


Energy-efficient homes: effects on poverty, environment and comfort (joint work with Vincent Roberdel, Vladimir Karamychev, and Theo Arentze

Wednesday 14 Febraury, 13:15 - 14:15, Kamerlingh Onnes Building, room A0.08

Energy efficiency improvements in low income housing are increasingly used as a policy instrument to alleviate poverty. Our paper shows that this may come at the expense of reduced environmental benefits. We follow 125,000 Dutch low-income households during eight years and exploit a quasi-experimental policy that diminished the heat losses in their homes. We pay specific attention to the policy effects at the very left tail of the income distribution. While the average after-policy reduction in natural gas consumption for heating amounts to 22%, the poorest only save 16%. We build and calibrate a microeconomic model explaining this pattern from substitution between thermal comfort and other goods, and use it to compute welfare trade-offs of the policies. 

Why Does Raising the Early Retirement Age Affect Employment?

Friday 26 January, 11:15 - 12:15, Kamerlingh Onnes Buidling, room C0.20    Jonathan Cribb (IFS)

Why do workers delay retirement when their early retirement age (ERA) rises? Understanding this is essential for predicting the effects of ERA increases in different contexts including assessing distributional impacts of such reforms. We study ten years of reforms in the United Kingdom which increased the ERA for women from 60 to 66. The UK is an attractive setting for this question because there is no financial incentive to retire at the ERA and older workers have robust age discrimination protection. Credit constraints are important: credit constrained groups experience around a 20-percentage-point larger increase in employment rates as a result of the reform than non-constrained groups. In contrast, groups with greater loss of pension wealth do not see larger increases in employment and employers do not delay dismissing employees as a result of the reform. There are smaller, but still large and statistically significant, increases in employment rates of around 9 percentage points for wealthier groups for whom other explanations are shown to be unimportant. This points to behavioural reasons such as signalling, framing, or social norms being important.


New Immigrant Political Parties, Social Democrats, and Economic Deprivation: Transformation of European Politics in the Case of the Swedish Nyans Party

Wednesday 10 January 2024, 13:15 - 14:15, Kamerlingh Onnes Building, room A0.02    Anna-Lena Nadler, Leiden University. Juliana Chueri, Free University of Amsterdam. Petter Tornberg, University of Neuchâtel and University of Amsterdam.

In the last decades, growing immigrant populations and the expansion of suffrage to non-citizens have made the question about immigrant political integration and representation increasingly relevant across Europe. Responding to this new electoral demand, a handful of Western European democracies recently experienced the emergence of political parties particularly representing immigrant and ethnic minorities. In Sweden, the Muslim party Nyans has obtained a higher-than-expected number of votes in the 2022 national elections. At the same time, the Social Democratic party for which immigrant-origin voters traditionally had voted, reached an all-time low in electoral support. Besides multiculturalism and integration, Nyans has heavily mobilized on unemployment, economic deprivation, and the housing crisis prevalent in districts with important immigrant populations. How does economic deprivation explain these shifts in party politics? In this paper, we examine to what extent high unemployment rates and economic deprivation among immigrant-origin communities explain the support for immigrant and ethnic parties and the decline of the left. Following the logic of a differences-in-differences design, we compare election results on the district level from the 2022 to the previous elections in 2018 where the Nyans Party was not yet established. We show that in electoral districts dense in immigrant-origin voters, the success of the Nyans Party is associated with a significant decline in vote shares for the Social Democrats and this association is conditioned by local economic deprivation. We conclude that the introduction of immigrant-specific parties in combination of feelings of being economically left behind by reigning Social Democratic parties have essential implications for party systems in diverse democracies.

Seminar: Esmee Zwiers

Wednesday 13 December 2023, 13:15 - 14:15, Kamerlingh Onnes Building, room B014

Training Jobseekers to Address Labour Shortages: An Experimental Study on Information Barriers” (joint work with Elisabeth Leduc)

Wednesday 6 December 2023, 13|:15 - 14:15, Kamerlingh Onnes Building, room B014
Ilan Tojerow (Université Libre de Bruxelles)

The Social Determinants of Retirement (With Emre Oral and Arthur Seibold)

Wednesday, 22 November 2023, 13:15-14:15, Kamerlingh Onnes Building, room B014
Simon Rabate (CPB)

We study whether individual retirement decisions are affected by the retirement behavior of others. Specifically, we investigate the influence of three key peer groups: families, coworkers and neighbors. To estimate peer effects, we exploit a large, cohort-based pension reform in the Netherlands that creates exogenous variation in peers' retirement ages, and we use administrative data on the full Dutch population. We document significant retirement spillovers between spouses and between siblings who are close to each other. While the average neighbor and coworker has small to no effect on the retirement decisions, there are large spillovers between similar neighbors and similar coworkers. In terms of underlying mechanisms, we find suggestive evidence of both leisure complementarity and norms effects. 

The impact of peers on fathers’ labour supply

Wednesday, 15 November, 13:15 - 14:15, Kamerlingh Onnes Building, room A014
Jordy Meekes (Leiden Law School)

Gender gaps in the Dutch labour market remain persistent. An important explanation for this observation is the slow-moving changes in gender norms and culture. Gender norms and culture are changing through peoples’ interactions with peers. So far, research on peer effects on work hours or leave taking after childbirth has almost exclusively focused on mothers. New whole-population network data and state-of-the-art research methods enable studying peer effects from neighbours, colleagues and family. Using micro-econometric techniques and Dutch administrative microdata, this project will study how fathers’ labour supply decisions are affected by their male peers upon receiving children.

Does opting out of Public Disability Insurance increase outflow to work? Evidence from the Netherlands

Wednesday 8 November 2023, 13:15 - 14:15, Kamerlingh Onnes Building, room A014.
Pim Koopmans (Leiden Law School)

In The Netherlands, firms can opt out of partial Disability Insurance (DI), becoming responsible for rehabilitating disabled workers themselves. Opting out creates incentives for firms to rehabilitate disabled workers. In this paper, we provide the first Dutch evidence of whether opting out of disability insurance increases work-related exits from partial disability. We estimate duration models with competing risks using administrative records from 2006 to 2022 containing disability spells, DI status, and the labor market status of partially disabled workers. We find that firms opting out achieve more outflow to work, primarily in the first years of disability. However, we find stronger effects still for outflow to recovery without work, and to full disability, and lower outflow for reasons such as retirement and death. These findings may be driven by firms that opt out having disabled workers re-assessed more. Our findings indicate that more active re-assessments may increase work resumption, but may also facilitate structural disability.

Tax incentives for migrants with mid-level earnings: evidence from the Netherlands (joint with Lisa Timm and Massimo Giuliodori)

Wednesday 1 November 2023, 13:15-14:15, Kamerlingh Onnes Building, room B014
Paul Muller

This paper examines how income taxes affect international mobility and wages of migrants. We study a Dutch preferential tax scheme for migrants, which introduced an income threshold for eligibility in 2012. The threshold is low relative to similar schemes in other countries, thereby offering eligibility to migrants with mid-level earnings. We find that migration in the income range closely above the threshold more than doubles, while migration below the threshold remains unchanged. These effects appear to be driven by additional migration, while wage bargaining responses are limited. We conclude that the reform of the tax scheme effectively attracts more migrants.

The anatomy of tax responsiveness: Evidence from Dutch closely held corporations

Monday, 30 October 2023, 13:15-14:15, Kamerlingh Onnes Building, room B026
Gabriella Massenz

We analyze bunching of closely held corporations at the 200,000 euros kink in the Dutch corporate income tax schedule. To do so, we use tax return and administrative data linking firms to their owners over 2009-2018. We find an overall elasticity of 0.07, which is mainly driven by responses built within the tax return. We investigate heterogeneity in individuals' and firms' characteristics and the use of targeted tax incentives. We find greater tax responsiveness for large firms using deductions for energy and environment investments and operating in energy and agriculture, forestry, and fishing industries. We show persistence in bunching, which is driven by large firms using deductions repeatedly and by firms owned by director-owners who locate repeatedly near personal taxable income kinks.

Temporary work agencies as stepping stones: exploiting variation in the timing of bankruptcy

Wednesday 25 October 2023, 13:15-14:15, Kamerlingh Onnes Building, room B014
Ron Diris (Leiden Law School)

There is a long debate in labour market research on the stepping stone function of “atypical” forms of work, in particular jobs with temporary contracts. On the one hand, these jobs offer an income to those who may be otherwise unemployed, and may provide an intermediate step up towards jobs that are more secure and better-earning. This stepping stone hypothesis has been contrasted with potential lock-in effects of temporary jobs. We analyze this trade-off by estimating the effect of taking up a temporary work agency (TWA) job, versus other jobs, for displaced workers. To deal with the endogeneity of TWA work status, we develop a novel approach that exploits differences in the timing of firm bankruptcies. The supply of TWA jobs is strongly seasonal, which implies that the timing of job loss affects the relative likelihood of being subsequently offered a TWA job. Our results provide evidence in favour of the stepping stone hypothesis for labour force participation but not for wages. Taking up a TWA job has positive employment effects in the very short run, and long-run positive effects for working hours. However, hourly wages are substantially negatively affected throughout the period under examination.

After the Floods: The Effects of Natural Disasters on Public Opinion on Climate Change

Wednesday 18 October 2023, 13:15-14:15h, Kamerlingh Onnes Building, room B031
Lars van Doorn (Leiden Law School)

An increasing number of people have experienced climate change firsthand over the last couple of years. This paper demonstrates that such experiences increase the saliency of climate change and the willingness for climate action. Using the floods across Germany in mid-July 2021 as a natural experiment, I estimate the causal effects of the disaster across the country. I show that the floods had a nationwide rather than a local effect, which explains why previous studies have yielded mixed results when comparing affected to non-affected regions. While direct exposure to the floods did not affect individual outcomes differently, additional analyses show that political identity and existing perceptions regarding climate change do. This has implications for the notion that the temporal mismatch between short-term costs and long-term benefits of fighting climate change will fade when more people experience the costs of inaction.

Female Labor Force Participation, Taxation and Intergenerational Spillovers

Wednesday 27 September 2023, 13:15-14:15h, Kamerlingh Onnes Building, room B0.41
Mareen Bastiaans

Many governments strive to increase female labor force participation. Second earners often face higher marginal tax rates, which can harm female labor supply. Hence, reducing disincentives to work from existing tax policies may increase female labor supply. However, this may also have spillover effects onto the labor supply of the next generation. In this paper, I exploit a reform in the Netherlands which abolished a tax subsidy for breadwinner families. I show that this reform increased labor supply of women directly affected. However,  daughters of these women reduce their labor supply and are more likely to have kids and be married. I do not find any effects on the labor supply or fertility of sons. I explore mechanisms that can explain this effect.

Koen Caminada presents the results of the report: Commissie Sociaal Minimum

Wednesday 20 September 2023, 13:15-14:15h, Wijnhaven, room 2.19
Koen Caminada (Leiden Law School)

Het kabinet heeft advies gevraagd aan een onafhankelijke commissie over wat verschillende huishoudtypen nodig hebben om in Nederland rond te kunnen komen en om mee te kunnen doen aan de maatschappij. De commissie is ook gevraagd om naar de systematiek van het sociaal minimum (inclusief toeslagen en gemeentelijke regelingen) te kijken. Het adviesrapport laat zien dat veel Nederlandse huishoudens met een inkomen rond het sociaal minimum leven in financiële bestaansonzekerheid. Zij hebben niet de noodzakelijke goederen en voorzieningen om rond te komen en mee te doen. Wanneer het uitgangspunt is dat het inkomen voor alle huishoudens minimaal toereikend moet zijn voor minimaal noodzakelijke uitgaven, dan zou het kabinet het wettelijk minimumloon met 7 procent moeten verhogen, de bijstand moeten verhogen met 94 euro per maand voor alleenstaanden en 135 euro per maand voor paren, en de kinderbijslag moeten verhogen met 90 tot 128 euro per kind per kwartaal (afhankelijk van de leeftijd van het kind) en het kindgebonden budget met 51 tot 62 euro per kind per maand moeten verhogen (afhankelijk van het aantal kinderen in een huishouden). Een dergelijke operatie kost structureel 6,2 miljard euro per jaar. Nu het kabinet demissionair is, is het de vraag of er op korte termijn flinke stappen worden gezet om de (kinder)armoede terug te dringen. Een breed aangenomen Kamermotie tijdens het debat over de val van het kabinet roept hier wel toe op, omdat bij ongewijzigd beleid een miljoen mensen, waaronder veel kinderen, in armoede dreigt te belanden. Al voor het uitbrengen van de Miljoenennota is bekend geworden dat het demissionaire kabinet in de begroting 2024 circa 2 miljard euro wil uittrekken om de koopkracht van vooral de laagste inkomens te ondersteunen en daarmee de armoede te bestrijden. Maar dat betreft alle huishoudens met lage inkomens, dus niet alleen huishoudens met kinderen. Het zou binnen het koopkrachtpakket gaan om ruim 1 miljard euro extra voor de kindregelingen en dus om veel minder geld dan de benodigde 3 miljard euro om het doel van kinderarmoedereductie te halen (Commissie Sociaal Minimum, 2023).

International Attitudes Toward Global Policies" (2023), with and Adrien Fabre and Linus Mattauch

Wednesday 13th September 2023, 13:15-14:15h, Kamerlingh Onnes Building, room B0.31
Thomas Douenne

We document majority support for policies entailing global redistribution and climate mitigation. Recent surveys on 40,680 respondents in 20 countries covering 72% of global carbon emissions show strong support for an effective and progressive way to combat climate change and poverty: a global carbon price funding a global basic income, called the “Global Climate Scheme” (GCS). Using complementary surveys on 8,000 respondents in the U.S., France, Germany, Spain, and the U.K., we test several hypotheses that could reconcile strong stated support with a lack of salience in policy circles. A list experiment shows no evidence of social desirability bias, majorities are willing to sign a real-stake petition, and global redistribution ranks high in the prioritization of policies. Conjoint analyses reveal that a platform is more likely to be preferred if it contains the GCS or a global tax on millionaires. Universalistic attitudes are confirmed by an incentivized donation. In sum, our findings indicate that global policies are genuinely supported by a majority of the population. Public opinion is therefore not the reason that they do not prominently enter political debates.

Resilience to Automation: the role of task overlap for job finding

Wednesday 6th of September 2023, 13:15-14:15h, Kamerlingh Onnes Building, room B0.31
Emilie Rademakers

We investigate the role of task similarity for the resilience of unemployed job seekers exposed to automation of routine tasks and other recent technological innovations. Using a language model, we establish a novel job-to-job task similarity measure. Exploiting the resulting job network to define job markets flexibly, we find that only the most similar jobs affect job finding. Since automation-exposed jobs overlap with other highly exposed jobs, task-based reallocation provides little relief for affected job seekers. We show that this is not true for more recent software exposure, for which task overlap mitigates the distributional consequences. Our counterfactual simulation highlights the potential harm of increasing job mobility as it strengthens the divided exposure of job seekers to routine-task automation.

Child penalties and the gender gap in home production and the labor market (joint work with Max van Lent and Jim Been)

Monday 26th of June, 10:00-11:00h, Kamerlingh Onnes Building, room A0.02.
Pim Koopmans (Leiden Law School)

The consequence of the arrival of children for the gender wage gap - known as the child penalty - is substantial and has been well documented. The impact of having children, however, also extends to work beyond the labor market, such as home production. In this paper we estimate - deploying an event study with Dutch survey data - the child penalty in home production and the labor market. We find no labor market effects for men, whereas for women we find no wage effects, but strong participation effects. However, we find an increase in household activity roughly similar to the decline in labor market activity. As a result, the time allocated to labor market plus home production is roughly equal across gender. This result rejects the hypothesis that women after the arrival of children exchange labor market activity for leisure. Our findings suggest policies targeted at household activity may be more effective at reducing gender gaps than labor market policies after the arrival of children.

Seminar by Paul Koster (VU, Amsterdam)

Wednesday 14th of June, 14:00-15:00h, Kamerlingh Onnes Building, room A0.08.

How to Finance Green Investment? The Role of Public Debt (which is joint work with Matthew DiGiuseppe and Jaroslaw Kantorowicz)

Tuesday 23th of May 2023, 11:00-12:00h, Kamerlingh Onnes Building.
Hendrik Vrijburg and Marion Collewet (Leiden Law School) 

Economic costs are a central political obstacle to investing in climate change mitigation and adaptation measures. Several studies now demonstrate that as costs increase, voters are less likely to support green initiatives. In this paper, we argue that opposition to government green investments is conditional on the method of financing. Notably, because public debt shifts the burden of investments into the future, it may face less public opposition than broad based taxes that require an immediate sacrifice. To test this proposition, we fielded a preregistered conjoint survey experiment on nationally representative samples in one highly indebted country (Italy) and one fiscally sound country (The Netherlands). Our experiment asked respondents to indicate support for green investment conditional on financing and other attributes. We find debt financing increases voter support for green financing by up to 10 percentage points relative to broad based taxes. However, we find carbon taxes and wealth taxes are most preferred. These findings can be used to better align climate policy packages to voter preferences.   

Keywords: green investments, public debt, public support, conjoint experiment 

Gender Differences in the Marginal Propensities to Consume, Pay Down Debt and Borrow

Tuesday the 16th of May 2023, 14.00-15.00h. Kamerlingh Onnes Building. 
Nathanael Vellekoop (University of Toronto)

A New Social Contract in Western Welfare States in an Era of Climate Change, Digitalization and Ageing

Thursday the 11th of May 2023, 12.30-13.30h. Kamerlingh Onnes Building, room B025.
Bea Cantillon (University of Antwerp)

The main mission of the welfare state is to improve the living conditions of the vulnerable in society. For many decades, however, the welfare state has failed to reduce poverty among the active population, in Belgium and elsewhere in Western welfare states. This is not only related to policy failures, there is more to it. The simultaneous increase of poverty, employment and social spending point to a systemic crisis of the welfare state : increasingly it has become more difficult to achieve decent incomes for all while preserving sufficient work incentives without greater efforts in terms of the size and the progressivity of social spending. To better manage climate change, digitalization and ageing a new social contract is therefore needed. That social contract should build on the achievements of the post-war social welfare state but it has to offer more security: by putting a floor under incomes, by broadening the repertoire of work, by including taxes on wealth and carbon emissions in the redistribution process and by intensifying the cooperation in the European and global context.

Do Automation Potentials Translate into Productivity Growth?

Thursday 4th May 2023, 10.00-11.00h. Kamerlingh Onnes Building, room B020.
Enno Schröder (TU Delft)

Public opinion and welfare state change: how important issues affect spending in different social programmes

Friday 21st April 2023, 10.15-11.15h. Wijnhaven Building (The Hague), room 3.12A/B
Daniel Alves Fernandes (Leiden Law School)

This article explores the role of public opinion on the generosity of social policy programmes. Drawing on the literature on government responsiveness, I argue that governments shape social policy in reaction to what the electorate wants in order to secure their chances of reelection. They invest in social programmes when the salience of related social issues is high, but only when citizens are favourable to broader government intervention in the economy to reduce inequality and improve wellbeing. I test this argument in fourteen Western European countries over the last 20 years in four distinct issue-policy areas: unemployment, pensions, healthcare, and education. By and large, the findings corroborate these claims. Governments appear responsive to public preferences in pension, healthcare, and education  programmes. This link is particularly strong when looking at two- and three-year differences, adding another piece of evidence that suggest that welfare policy change often takes time to be realised. In contrast, the generosity unemployment compensation does not seem to be a function of social policy preferences. These findings can be explained by the size and scope of unemployment programmes. They benefit comparatively small and weakly organised constituencies. These benefits are arguably less likely to affect election outcomes, thus creating fewer incentives for governments to be responsive to public preferences.This article has a crucial contribution to the literature on social policy change. It deviates from the standard explanations that primarily hinge on path-dependent effects, institutional contraints, and exogeneous economic pressures. Instead, it builds on more recent scholarship that turns the focus back to electoral politics. But it goes one step further by presenting a unique take on public opinion. Instead of relying on citizens’ labour-market status to infer their preferences, it leverages more dynamic measurements while building on the key idea that citizens may have heterogeneous
orientations across different social policy areas.

Measuring selection in insurance markets due to genetic prediction – preliminary results

Monday 20th March 2023, 15.00-16.00h, Kamerlingh Onnes Building, room C022.
Richard Karlsson Linnér (Leiden Law School)

Genomic prediction of disease risk is a “key enabling technology” expected to revolutionize precision medicine and disease screening. The promising genome-wide testing technology is fast approaching clinical utility. Prototype versions of this upcoming test type have already been sold in the millions in the booming market for at-home consumer genetic testing. The insurance industry is monitoring this development closely, as the health information revealed by new genetic tests could introduce information asymmetries and adverse selection. However, there is considerable scholarly disagreement on whether genetic tests will be powerful enough to disrupt insurance markets and whether the fears of adverse selection are unfounded. Here, we develop a new methodology to estimate the future predictive accuracy of the genome-wide testing technology, which extends previous approaches by introducing the opportunity to adjust for existing information. We apply the methodology to study a selection of serious medical conditions in the UK Biobank (N ~ 500,000) and then evaluate the expected future selection for critical illness insurance by using the Hendren competitive insurance market model. This presentation will report some preliminary results for breast cancer and coronary artery disease.

Beyond GDP

Thursday 16th March 2023, 14.00-15.00h. Kamerlingh Onnes Building, room B035.
Rutger Hoekstra

Estimating the Economic Impact of International Students in OECD Countries

Thursday 23th February 2023, 15.15-16.15h. Kamerlingh Onnes Building, room A002.
Giacomo Boffi (Leiden Law School)

This WIP seminar presents the work done by Giacomo in his collaboration with the OECD for a special chapter of the International Migration Outlook in 2022, and his proposed intention to turn it into a (descriptive) academic paper. The presented work takes account of all previous methods and attempts to estimate the economic impact of international students in OECD countries, and tries to come up with new comparable estimates. The idea is to link the direct macroeconomic contribution of international students in the host country to their individual (micro) development. In the OECD as a whole, direct revenues from international students increased from over EUR 50 billion in 2010 to over EUR 115 billion in 2019. In Australia and New Zealand, exports of education-related services accounted for 8% and 5% of total exports, respectively, in 2019. During their studies, between one in three and one in four international students work in the EU, the United Kingdom and the United States, about one in two in Australia and nine in ten in Japan. International students who remain in the host country post-study have long-term employment rates that are on par with those of labour migrants and well above those of migrants overall. Their overqualification rates are half of those of labour migrants or other migrant groups.

Doing green things: skills, reallocation, and the green transition

Thursday 16th February 2023, 14.00-15.00h. Kamerlingh Onnes Building, room C022.
Stefanos Tyros 

This paper applies a task-based framework to granular data from the Occupational Information Network (O*NET) and country-specific employment sources to generate new indicators on the green skills structure of labour markets. Significant cross-country differences emerge in the underlying supply of green skills (Green Skills Index; GSI) and the potential of economies to reallocate brown job workers to green jobs within their broad occupation categories (Green Transition Index; GTI). Workers in most detailed brown occupations have the necessary skills to transition to green jobs, although policymakers should pay close attention workers in production occupations where transitions to green jobs appear less feasible. We also show that workers from most highly automatable occupations do not have the sufficient skills to transition to green jobs, suggesting limited potential for the Green Transition to reinstate labour displaced by automation. Finally, the GSI and GTI are higher in countries with more stringent environment policies, while framework policies that shape labour mobility also appear relevant to the labour market transition costs of decarbonisation. 

The effects of debt relief on work and mental health among the financially vulnerable: Quasi-experimental evidence

Wednesday 1st February 2023, 10.00-11.00h. Kamerlingh Onnes Building, room B032.
Ernst-Jan de Bruijn (joint work with Heike Vethaak, Marike Knoef, and Pierre Koning) (Leiden Law School)  

We study the labor market and mental health impacts of debt relief among financially vulnerable individuals. We exploit a cutoff rule used by a Dutch welfare agency to determine eligibility to debt relief of welfare debts. We instrument this cutoff in both a fuzzy regression discontinuity and instrumented difference-in-difference design. Using administrative data, we estimate economically small and insignificant effects of debt relief on labor market outcomes and mental health. We discuss some explanations for these results.  

Application Processing Times and Prepayments in the Dutch Welfare System

Wednesday 14th December 2022, 15.30-16.30h. Kamerlingh Onnes Building, room B020.
Heike Vethaak (Leiden Law School)  

In this paper we investigate the effects of lengthy application processing times on welfare applicants. For causal inference we use variation in application processing times between randomly assigned caseworkers as an instrumental variable using the ‘judge leniency’ design. We find that processing times only affect the timing of welfare benefits and employment, but not the cumulative results of the economic outcomes. We argue that absence of direct financial consequences of longer application processing times and the rich availability of prepayments to prevent liquidity constraints explain our findings. However, in an additional analysis we show that long application processing times without receiving prepayments can have large negative consequences on the applicants.

Magnitude and effectiveness of shadow education in Dutch primary schools

Monday 14th November 2022, 10.00-11.00h. Kamerlingh Onnes Building, room B020.
Kim Fairley (joint work with Ron Diris) (Leiden Law School)

This study examines the effect of shadow education in Dutch primary schools as potential channel for inequality of opportunities in the Netherlands. Based on a survey we distributed via Kantar (n=4695 children), 26% of surveyed parents indicated that their childen are currently enrolled in some form of shadow education. Perhaps surprisingly, we do not find that the use of shadow education in primary schools is shaped by parents' educational attainment. We do find that the particular form of shadow education is modestly shaped by parents' social economic status, indicating remedial for children from parent with lower social economic status and striving for excellence for children from parents with higher social economic status. Importantly, we do not find that the students who undertake shadow education have better school results, but we find a classic Ashenfelter's dip in our results: parents react strongly to a one-time negative school result by enrolling their children in shadow education. In the subsequent period after enrollment, school results are back to normal and seem to be positively influenced by shadow education, yet are caused by the artefact of the school result in the previous period. 

Elicitation and aggregation of preferences through hypothetical allocation of public budget

Tuesday 11th October 2022, 11.00-12.00h. Location: Kamerlingh Onnes Building, room B032
Marion Collewet (Leiden Law School)

This paper presents a new method to elicit and aggregate preferences of citizens over public projects. The method consists of letting citizens allocate a limited public budget across public projects in a choice experiment (Participatory Value Evaluation). Cardinal utilities are estimated from this choice experiment, and aggregated to evaluate a social welfare function. We argue that aggregating utilities is possible because the measure of utility we aggregate is made comparable across individuals by the experimental setting. We argue that aggregating utilities is desirable because it takes into account different marginal utilities of income and fairness considerations of citizens.

International taxation and bilateral royalty flows

Tuesday 4th October 2022, 11.00-12.00h. Location: Kamerlingh Onnes Building, room B020
Maarten van 't Riet (Leiden Law School / CPB)

Shifting intellectual property rights over jurisdictions is one of a multinational’s strategies to lower corporate income taxation. The direction of the reimbursements of IP-licenses can be used by multinationals to allocate profits globally. We investigate to what extent bilateral royalty flows are indeed affected by differences in corporate income and withholding taxes. Using OECD data between 2014 and 2018, we try to isolate the influence of effective tax rates on the IP-location. These rates are derived from a network analysis which distinguishes direct planning gains of IP-shifting and treaty shopping gains. The latter are gains from exploiting lower bilateral withholding taxes through conduit countries. We employ Poisson Pseudo Maximum Likelihood estimators and conclude that direct planning gains increase the size of bilateral royalty flows and that higher withholding taxes on royalty flows decrease its size. We estimate that about 25% of the royalty flows is motivated by tax planning motives.

The retirement-consumption puzzle: Evidence from Dutch transaction data

Tuesday 20th September 2022, 12.00-13.00h. Location: Kamerlingh Onnes Building, room B020
Pim Koopmans (Leiden Law School)

Flexibilisering, globalisering en technologische vooruitgang: gevolgen voor arbeidsmarkt en sociale zekerheid

4th July 2022, 12.00-13.00h. Location: Kamerlingh Onnes Building, room B026
Lars van Doorn (Leiden Law School)

The optimal design of welfare: taxpayers’ preferences

28th June 2022, 14.00-15.00h. Location: Kamerlingh Onnes Building, room A002
Marion Collewet (Leiden Law School, joint work with Kim Fairley, Roseline Kessels, Marike Knoef, and Olaf van Vliet)

The optimal design of welfare is characterized by a trade-off between insurance and incentives. While we know a lot about the incentive effects of welfare systems, we know a lot less about how taxpayers value the insurance motive and about what drives their views. In this paper, we run a choice experiment with 2000 survey respondents representative of the Dutch population. We ask them to make choices between policy packages, characterized by different levels of income for welfare recipients, different obligations, different levels of sanctions, of earnings disregards, of gifts disregards, and different annual costs of welfare in terms of taxes for the average Dutch household. Respondents are in favor of fulfilling the insurance motive through relatively generous benefits and disregards, and of satisfying the incentives motive by other means, such as monitoring and activation. We find that respondents’ preferences for the design of welfare are driven mainly by self-interest, preference for equality, and trust in government, but not by risk aversion.

Workers’ Moral Hazard and Insurer Effort in Disability Insurance

Thursday 23th June 2022, 11.00-12.00h. Location: Kamerlingh Onnes Building, room A002
Max van Lent (Leiden Law School, joint work with Pierre Koning)

Disability Insurance (DI) may affect workers' probability to enter DI, to recover, and employment. Supplementary insurance may increase these moral hazard effects, but also increases the financial gains of private insurers to reduce benefit costs. With increased prevention and reintegration, the overall effects of increased insurance coverage on workers' outcomes are thus ambiguous. This paper aims to separate worker and insurer responses to increased insurance, using unique administrative data on firms' supplementary DI insurance. Using a Two-Way Fixed-Effects model on the sickness and employment rates of worker cohorts with and without supplementary contracts at some point in time, we find that insurer efforts compensate workers’ moral hazard effects.

New projects

Tuesday 14th June 2022, 14.00-15.00h. Location: Kamerlingh Onnes Building, room A002
Richard Karlsson Linnér (Leiden Law School) discussed some of his new projects, with the preliminary titles:

  • Measuring selection in insurance products due to genetic prediction
  • Predicting selective lapsation of insurance contracts with genetic risk scores
  • What is the link between unobserved genetic risk factors and variation in subjective probabilities?
  • A study of the willingness to share DNA for science in the LISS panel

Fostering trust: When the rhetoric of sharing can backfire

Thursday 12th of May 2022, 13.30 – 14.30h. Location: Kamerlingh Onnes Building, room B020
Simona Cicognani (joint with Giorgia Romagnoli and Ivan Soraperra)

The peer-to-peer lending and transfer of underutilized resources - the so-called Sharing Economy - make up for a sizeable and rapidly increasing portion of the economy. The digital platforms that enable it have the primary goal of promoting trust among users and providers. In an online experiment, we study how the platform’s revenue model (pure-sharing vs. for-profit) interacts with the communication strategy in shaping trust. In particular, we consider two communication strategies, one highlighting the trust dimension and the other one highlighting the profitability of the interaction, and we show how these strategies can have different effects on trust for pure-sharing and market-oriented for-profit platforms. We observe that a communication strategy that evokes trust feelings if sent by a for-profit platform decreases trust in the interaction. This evidence suggests that leveraging a rhetoric of trust can backfire for-profit oriented platforms in terms of trust generation.

Free-riding on scrappage subsidies: Evidence from a vehicle retirement acceleration programme in the Netherlands 

Monday 9th of May 2022, 11.00 -12.00h. Location: Kamerlingh Onnes Building, room B020
Hendrik Vrijburg (joint with Alexandros Dimitropoulos)

Scrappage subsidies are often viewed as an effective policy instrument to stimulate economic activity during periods of recession and to massively replace old and polluting durable goods with newer, cleaner and more energy-efficient ones. However, the effectiveness of such subsidies in reaching their environmental and economic goals is frequently hampered by adverse selection, which enables participants to free-ride on the subsidy or to undertake only minimal behaviour changes. We study Dutch vehicle owners’ behavioural responses to a nationwide programme offering a subsidy to those scrapping an old light-duty vehicle and replacing it with a newer and cleaner one. Using a unique dataset on all vehicle registrations and retirements in a six-year period and a triple-difference approach, we empirically estimate the effects of the policy. We find that the policy was successful in removing old vehicles earlier from the roads, in temporarily stimulating economic activity in the car market and in accelerating the greening of the vehicle fleet. Only a very small share of participants can be characterised as pure free-riders, i.e. individuals who would have anyway scrapped their old vehicle and replaced it with an eligible one in the year the policy was implemented. However, most participants receive a subsidy only for offering a functional vehicle for scrap instead of selling it on the second-hand market – a likely costless change for them. On the purchase side, the policy may only have induced individuals that would anyway buy an eligible vehicle to bring their decision forward.  

The relation between skills and job security: International evidence from PIAAC

Monday, 28th of March, 2022. 12.00-13.00h, Kamerlingh Onnes Building, room B014
Ron Diris (Leiden Law School)
The last decades have shown that the traditional steady job with a permanent contract is on the decline, and that flexible employment (fixed-term employment, temp agency work, gig work) is becoming more common. This trend may create a divide in the labour market between insiders and outsiders. Particularly, flexible employment has been shown to relate negatively to job satisfaction, human capital investment and fertility. As such, indefinite contracts and the insider position that they bring are valued by workers. Research on the returns to education and skills have, however, predominantly focused on wages and employment as outcome measures. This study uses PIAAC data from 29 countries to estimate how skills relate to the odds of obtaining a permanent contract, as opposed to alternative flexible contract arrangements for employees. We find that skills relate
substantially to the odds of obtaining a permanent contract. Numerical skills contribute more than literacy skills; a difference that is largely driven by sorting to occupations and industries. We further identify substantial heterogeneities across countries, in which either no skills, only numerical skills or only literacy skills significantly predict permanent employment at the country level, but never both. Moreover, these country-level skill returns to job security differ substantially from country-level skill returns to wages. We find indicative evidence that these differences are partly driven by demand factors and labour market institutions.

FGGA Research Seminar: Globalisation and migration: The political economy of welfare state reform

Thursday 22 November 2018 15.30-17.00h, Wijnhaven, room 4.78.
Click here.

Preventing NEETs During the Great Recession: The Effects of a Mandatory Activation Program for Young Welfare Recipients

Monday 23 January 2017 11.30 – 12.30h, Kamerlingh Onnes Building, room B020 
Emile Cammeraat (Leiden Law School) 
We study the impact of a mandatory activation program for individuals up to 26 years of age in The Netherlands. The program, introduced in 2009, after the start of the Great Recession, aimed at preventing young NEETs (not in employment, education or training). Using a rich administrative data set for the period 1999-2012, we perform both a differences-in-differences analysis and a regression discontinuity analysis, using individuals 25-26 as a treatment group and those 27-28 years of age as a control group. We find that the reform reduced the number of NEETs on welfare, increased the number of NEETs not on welfare, and had no effect on the overall number of NEETs. Furthermore, we find no `treatment effect' on the employment rate, nor on the enrollment rate in education. Hence, the reform did not have the intended effect of reducing the number of NEETs, but instead pushed the NEETs out of welfare.

Bestedingen van ouderen: de ontwikkeling van het uitgavenpatroon van gepensioneerden onder de loep

Tuesday 27 September 2016, 11.00 – 12.00h, Kamerlingh Onnes Building, room C004 
Anna van der Schors (NIBUD) 
Dit onderzoek geeft inzicht in de bestedingen van gepensioneerden in het licht van allerlei maatschappelijke ontwikkelingen die van invloed zijn op hun financiële situatie. Gekeken is naar de ontwikkeling van het uitgavenpatroon in de periode voorafgaand aan en volgend op pensionering, vanaf 50 jaar tot het moment van overlijden. Hiervoor is gebruik gemaakt van het meest recente Budgetonderzoek van het Centraal Bureau voor de Statistiek (CBS), uit 2013. We zien dat gepensioneerden aan bepaalde posten meer uitgeven dan 65-minners. Vooral aan de zorgkosten wordt meer uitgegeven en we verwachten, gezien het huidige zorgstelsel, WMO en Wet langdurige zorg, dat deze kosten in de toekomst zullen toenemen. 
Ook aan huishoudelijke hulp, stookkosten en contributies en abonnementen wordt meer uitgegeven naarmate men ouder wordt. Bij gepensioneerden vinden we een duidelijke stijging bij de vrijetijdsuitgaven, maar als ze ouder worden nemen deze uitgaven weer af. 
Wanneer een koophuis is afbetaald wordt minder uitgegeven aan woonlasten. Maar er zijn wel zorgen over de groep huurders en koopwoningbezitters met een aflossingsvrije hypotheek of een nog niet afbetaalde hypotheek.


Wednesday 31 August 2016, 11.00 - 12.00h, Kamerlingh Onnes Building, room B035 
Olaf van Vliet (Leiden Law School) 
Recently, Leiden University has adopted a Regulation for Data Management. Data management includes all decisions and actions needed to organize, structure, store and care for the information used or generated during a research project. The purpose of data management is to make research data discoverable, accessible and understandable in the long term. As most of us are working with data, Leiden University’s new regulation has implications for us as researchers. For instance, one of the implications is that each research project should be equipped with a Data Management Plan. In this Research Seminar, I will introduce the new regulation. Furthermore, we can discuss how we can make the research projects of our department ‘data management-proof’.

Making Disability Work: The Effects of Financial Incentives on Partially Disabled Workers

Thursday 31 March 2016, 11.30 – 12.30h, Kamerlingh Onnes Building, room C020 
Pierre Koning (Leiden Law School) 
This study provides insight in the responsiveness of disabled workers to financial incentives, using administrative individual data from the Netherlands from 2006 to 2013. We focus on workers receiving partial DI benefits and with substantial residual work capacities that can be exploited. After the first phase of benefit entitlement, workers that do not use their residual income capacity experience a large drop in benefit income. In effect, this implies a substantial increase in incentives to resume work. With entitlement periods in the first phase of DI benefits varying across individuals, we use a difference-in-difference approach to analyze the effects on the incidence of work, the wage earnings and full work resumption of disabled workers. Based on the effect estimate on work incidence, we infer a labor elasticity rate of 0.12. Elasticity estimates are highest among younger DI recipients, as well as individuals with mental impairments. The incentive change has only a limited impact on wage earnings of partially disabled workers and no significant impact on work resumption rates.

Stimulating prosocial behavior by way of punishment: a field experiment into sorting of household waste

Tuesday 12 January 2016, 11.30 – 12.30h, Kamerlingh Onnes Building, room A014 
Ben Vollaard (with Daan van Soest), Tilburg University
When using extrinsic incentives to stimulate prosocial behavior, rewards are the policy of choice, even though the evidence suggests that the ‘carrot’ may be less effective than the ‘stick’. We focus on behavior that is typically stimulated by rewards and moral appeals: sorting household waste. We study the effect of stressing the illegal nature of incorrectly sorting waste, and subsequent enforcement of the rules (by the so-called ‘kliko-politie’). For a period of a month, detected offenders get a highly visible, brightly colored warning label attached to their garbage container; repeat offenders may get fined. In addition, a random sample receives feedback in the form of a white label that no wrongdoing has been detected. We randomly vary the timing of introduction of this one-month treatment among 60,000 households in the city of Tilburg, the Netherlands. We find a sharp increase in the percentage of household waste that is sorted in response to the treatment. Given concerns about loss of intrinsic motivation, we follow households for many months after the intervention ended. We find some decay in the behavioral effect over time. The white labels do not seem to have had an effect on behavior.   

The elasticity of taxable labour income in the Netherlands

Monday 14 December 2015 
Egbert Jongen (Leiden Law School) 
We study the elasticity of taxable labour income of employees in the Netherlands. The large 2001 Dutch tax reform generates substantial variation in marginal tax rates at different segments of the income distribution. We instrument the endogenous marginal tax rates with synthetic marginal tax rates using projected income. We control for exogenous income growth by including a number of socioeconomic variables, sector dummies, and log base-year income or a spline in log base-year income. For all workers we find an elasticity of 0.24. For high wage workers we find higher elasticities. We also compare the elasticity of taxable labour income with the elasticity of hours worked.

Pension wealth and retirement expenditure goals before and after the crisis

Monday 2 November 2015 
Lieke Kools (Leiden Law School) 
Based on a combination of survey and administrative data, De Bresser and Knoef (2015) investigated the retirement readiness of the Dutch population in January 2008, at the eve of the downturn in the financial markets. The majority of Dutch households saved enough for their retirement, but there was also a substantial number of households who were expected to fall short with regard to their self-reported minimal and preferred level of expenditures during retirement. When accrued pension rights and savings (without housing wealth) were considered, 35% of the people was expected not to meet their self-reported desired consumption needs during retirement. 26% was expected not even to be able to fulfill his or her self-reported minimal consumption needs. During the crisis house prices have fallen. Also, pension entitlements have been cut. On the other hand, people may have adjusted their consumption ambitions for retirement as a result of the crisis and the gloomy media reports about pensions. Therefore, we have again conducted the questionnaire on minimal and preferred level of expenditures during retirement (consumption ambitions). The first results show people adjusted their consumption ambitions downwards, though this adjustment is on average smaller than the drop in wealth holdings. Still, more individuals are now able to meet there consumption ambitions after retirement, suggesting that the ‘right’ people have adjusted their ambitions.  

Home production as a substitute to market consumption

Monday 5 October 2015 
Jim Been (Leiden Law School) 
Becker’s 1965 theory of home production suggests that people will substitute away from market consumption as the opportunity cost of time drops. This makes people able to smooth consumption in response to shocks in income. Prior studies have investigated the effect of a drop in the cost of time on home production by analyzing shocks of retirement, unemployment and disability. Such shocks both decrease the households monetary budget and increase the time budget simultaneously. Hence, home production responses are the cumulative effect of decreased market consumption and increased non-market time available. The seminar discusses two recent papers that contribute to the literature by separating an increased time endowment from a pure substitution effect. The first paper estimates an elasticity between market consumption and home production for retirees using exogenous and unanticipated variation in houseprice shocks from the Great Recession. The second paper estimates the causal effect of couples’ retirement decisions on simultaneous consumption spending and home production decisions. For causal identification, the paper exploits legislation regarding Social Security benefits claiming. Both papers suggest  that much of the home production responses to shocks come from increased time endowments. The substitutability between market consumption and home production exists, but the scope for substitution is rather limited. The results indicate that traditional analyses of the adequacy of retirement savings, using income or consumption spending, underestimate the adequacy of retirement savings for well-being as retirees have more non-market time available.

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