Assessing the Benefits Reform in Slovenia Using a Microsimulation ...

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for the social assistance simulations (implying that incomes are received at the same rate andproperty data are missing). In addition, the income structure most probably changed between 2007and 2010 as the minimum wage rose by 22.9% in March 2010. This increase mainly influencedpeople at the low end of the income distribution and the updating of incomes could not capture thisstructural change 4 .Table 2: Macro validation of the main simulated benefits in a replication of the 2010 benefit systemNo. ofrecipientsin 1000Administrative data Calculated data IndexTotalamount,EUR1,000Averagebenefit(monthly),EURNo. ofrecipientsin 1000Totalamount,EUR1,000Averagebenefit(monthly),EURNo. ofrecipientsin 1000Totalamount,EUR1,000Averagebenefit(monthly),EURChild benefit 374.5 289.6 64.5 432.8 342.4 65.9 115.6 118.2 102.3Social assistance 48.7 132.5 226.9 59.2 146.7 328.8 121.6 110.7 144.9Minimumpension support44.7 52.3 97.4 39.8 36.3 76.1 88.9 69.4 78.1State scholarship 39.5 73.1 154.4 50.7 96.5 158.4 128.5 131.9 102.6Notes: *The difference in the number of social assistances recipients might be misleading as external statisticsrefer to the average monthly number of recipients, while the number calculated with the microsimulationmodel refers to the total annual number of recipients in 2007.Sources: Own calculations, microsimulation model;Ministry of Labour, Family and Social Affairs, 2011;Institute for Pension and Disability Insurance, 2010.Finally, the new legislation concerning social benefits in 2010 is simulated. Then the percentagechange between the calculated aggregate amounts considering the new legislation and the calculatedaggregate amounts considering the current benefit system in 2010 is estimated. The effects ofchanges foreseen at the aggregate level are estimated for 2010 by applying this percentage change toadministrative aggregate data for 2010. Thus, data limitations and assumptions are mitigated to acertain extent.3. REFORM CHANGES CONCERNING SOCIAL BENEFITSAfter the reform is implemented all social benefits 5 will be governed by the Exercise of Rights toPublic Funds Act and the Financial Social Assistance Act. The new legislation changes familyincome which is the basis for the income test from gross family income to net family income, whichalso includes social benefits received.3 It also could not be simulated for policy year 2010.4 The changed income structure does not influence the PIT simulations as much as social benefits. PIT calculated by themodel coincides very well with the recorded PIT. The actual aggregate amount of PIT in 2004 was 3.9% higher than inour simulation5 We only focus on the four most important benefits. However it should be noted that the microsimulation model wasused to simulate other benefits/subsidies, namely: childcare subsidies, subsidised school meals, subsidised schooltransport, paid compulsory health insurance and entitlement to the full value? of health services.6
Child benefit is currently a means-tested benefit, held by one of the parents for a child residing inSlovenia. The right to a child benefit is retained until the child reaches 18 years of age, as well as forthe period in which the child continues with full-time education, but only until the child reaches 26years of age. Child benefit is only paid in case the income per family member, in the calendar yearprior to submission of a claim, was below the average wage in Slovenia. As already mentioned, a netincome approach is taken into account under the new legislation, but the income brackets remainspractically the same in absolute terms. The new legislation also reduces the age of a child’sentitlement. The right to a child benefit is held only until the child reaches 18 years. Besides, thechild benefit for eligible students included in higher secondary education (aged less than 18 yearsand with an income per family member below the average wage) is higher which is evident fromTables 3 and 4.Table 3: Monthly amounts of child benefit in 2010 – current legislationMonthly child benefit for a child from birth to the end of primaryGross family income per family memberschool, in EURas a percentage of the average gross wage3rd and every1st child2nd childsubsequent childto 15% 114.31 125.73 137.18more than 15% to 25% 97.73 108.04 118.28more than 25% to 30% 74.48 83.25 91.98more than 30% to 35% 58.75 67.03 75.47more than 35% to 45% 48.04 56.06 64.03more than 45% to 55% 30.44 38.1 45.17more than 55% to 75% 22.83 30.44 38.1more than 75% to 99% 19.88 27.5 35.11Source: Ministry of Labour, Family and Social Affairs, http://www.mddsz.gov.si/.Table 4: Monthly amounts of child benefit in 2010 – new legislationNet family income perfamily member as apercentage of theaverage net wageMonthly child benefit for a child frombirth to the end of primary school, inEUR3rd and every1st child 2nd childsubsequent childMonthly child benefit for a childincluded in upper secondary education,in EUR3rd and every1st child 2nd childsubsequent childto 18% 114.31 125.73 137.18 168.31 179.73 243.55more than18% to 30% 97.73 108.04 118.28 142.73 153.04 206.88more than30% to 36% 74.48 83.25 91.98 110.48 119.25 162.89more than36% to 42% 58.75 67.03 75.47 85.75 94.03 128.58more than42% to 53% 48.04 56.06 64.03 68.04 76.06 103.27more than53% to 64% 30.44 38.1 45.71 43.44 51.1 71.17more than64% to 82% 22.83 30.44 38.1 28.83 36.44 49.65more than82% to 99% 19.88 27.5 35.11 19.88 27.5 34.69Source: The Exercise of Rights to Public Funds Act, 2010.7
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