3. Scenario parameters

The model has the following scenario and policy parameters:




Initial status at 17. These are the probabilities of being in a specific status at 17, the age at which individuals enter the simulation. States are (i) student, (ii) active (given not a student), (iii) employed (given active). The probabilities of having different education levels, given that an individual has already left education, are also included. The probabilities are distinct for males and females. In all the scenarios considered the probabilities of being in a specific status at 17 are kept constant throughout the simulation.

Persistence of the effects of the crisis. This is a parameter which can vary between 0 and 1 over simulation time. A value of 1 means that the effects of the crisis on participation rates as detected in the years 2009-2011, on top of the other controls, are still fully deployed; a value of 0 means that they have completely faded away. This parameter assumes a value of 1 in the base year (effects of the crisis as observed in the data), and decreases linearly to 0 up to 2020 (2030 for Greece), in the baseline scenario. It is fixed at 0 afterwards (effects of the crisis completely absorbed).

Overall unemployment rate. This is an alignment parameter that controls the overall unemployment rate in the simulated population. It is allowed to vary over simulation time. The parameter starts from the actual unemployment rate in the last year of observation, and it decreases linearly down to a pre-crisis level in 2020 (2030 for Greece), in the baseline scenario.

Average retirement age. This parameter controls the location of the distribution of retirement age from which individuals draw their actual retirement age, and is primarily controlled by the institutional arrangements. It is distinct by gender and simulation time.
This parameter is increased linearly, separately for men and women, from the values observed in the EU-SILC data to 70 years of age in 2050, for both males and females and in all scenarios. Hence, all countries are assumed to have an average retirement age of 70 in 2050, for both men and women. This should not be considered as a prediction, but rather as a benchmark.

Standard deviation of retirement age. This parameter controls the width of the distribution of retirement age from which individuals draw their actual retirement age, and is also primarily controlled by the institutional arrangements. It is in principle allowed to vary across genders and over time. However, since the within-country, within-gender standard deviations of retirement age, as observed in the EU-SILC data, vary only little, they are kept constant throughout the simulation at their average observed values, in all scenarios.

Public childcare expenditures. This policy parameter is distinct by region and simulation time, and is measured in USD in purchasing power parity (PPP) per child, as detailed in the OECD Family database. Benefits vary according to the age of the child. Therefore, the total amount of benefits are reconstructed for each family in the simulation on the basis of the presence and age of children. These parameters affect the maternity and female labour force participation modules, and are kept constant throughout the simulation: because there are no prices in the model, this is equivalent to assuming that they remain constant also in real terms. In the baseline scenario, their level is that reported in the OECD Family database.

On leave benefits. This policy parameter is distinct by region, and is measured in number of weeks of paid parental leave, as detailed in the OECD Family database. It affects the maternity and female labour force participation modules and it is distinct by country. Duration of paid parental leave is kept constant throughout the simulation. As a default (baseline scenario) it is set to the levels reported in the OECD Family database.

Part-time availability. This parameter refers to the overall frequuency of part-time, at a regional level. It is meant to reflect human resource management practices and incentives towards the use of part-time, in addition to social norms and family-work balance preferences. It is therefore only partially under the control of decision makers. Part-time rates are also kept constant throughout the simulation, in all scenarios, with a default value equal to that observed in the last year of the data.


Previous: 2. Estimates