Assessing Hypothetical Scenarios for Estimating Labor Supply Responses: Evidence from a Pension Reform

Author: Nicola Fuchs-Schündeln (WZB and Goethe University Frankfurt) • Jonas Jessen (WZB and IAB) • Pinchuan Ong (National University of Singapore) • Jessica Pan (National University of Singapore)
Posted: 24 September 2026

Abstract

We assess whether survey responses to hypothetical policy scenarios can recover actual labor supply responses from policy variation. We study the German Mütterrente, a pension benefit crediting parents for child-rearing, benchmarking against Artmann et al. (forthcoming). Surveying mothers and fathers about a hypothetical reform modeled on that expansion, we find that mothers expect to reduce their labor supply, with an implied marginal propensity to earn of−0.65—close to the quasi-experimental estimate of−0.54. The response is sensible across subgroups, falls mainly on the extensive margin, and spills over to fathers. In the aggregate, spousal predictions match partners’ own reports.
JEL codes: J22, H55, D84, J26, D10
Keywords: marginal propensity to earn, hypothetical scenarios, subjective expectations, benchmark