The Monetary Value of Family Policy Measures in Germany over the Life Cycle: Evidence from a Dynamic Microsimulation Model

This article quantifies the monetary value of key family policy measures in Germany over the life cycle. The analysis is based on a dynamic microsimulation model that combines simulated life cycles for a base population from the 2009 wave of the German Socio-Economic Panel with a comprehensive tax-benefit model. The results indicate that households in Germany receive family-and marriage-related transfers of considerable monetary value, yet there is also substantial variation behind the population average. Moreover, it is shown that some measures, such as income tax splitting, may make individuals in fact worse off, in financial terms, over the long course, as a result of negative labour supply incentives which are reinforced through detrimental effects on human capital accumulation (JEL codes: C53, C54, J12, J13, J22).