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

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 efiects of a reform of the rules for cumulating labour income with survival pension as proposed in the Generations Pact. In a flrst step we estimate a standard discrete choice labour supply model for several sub groups. Subsequently we model the proposed reform in the tax and beneflt rules and we predict the change in desired labour supply of the targeted group. The reform has a signiflcant positive efiect on the labour supply of widows, but the efiects are quite weak amongst the survivor pensioner with very low beneflt, i.e. the group that was originally thought to beneflt the most from the reform. Keywords: Tax-beneflt Systems { Microsimulation { Household Labour Supply