The FIT Labour Supply Model for Germany
Warwick International Symposium on Employment and Skills Forecasting
University of Warwick, September 29, 2011
Michael Kalinowski and Carsten Hänisch
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Introduction - About Fraunhofer FIT
 Established research group in development of microsimulation models
 Major clients: German federal ministries
 Among these projects:
o Long-term (~20 years) labour supply projections for the German Federal
Ministry of Education and Research (2007) and the former Bund-Länder
Commission for Educational Planning and Research (2001)
o Since 2008 in cooperation with:
o Federal Institute for Vocational Education and Training (BIBB)
o Institute for Employment Research (IAB)
o Institute of Economic Structures Research (GWS)
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Main data sources (Labour Supply)
 Education statistics (FSO - Federal Statistical Office), yearly
 Projections of future stocks in the educational system (KMK - Standing
Conference of the Ministers of Education and Cultural Affairs of the
Länder in the Federal Republic), every 3-5 years
 Population projections (FSO), every 3-5 years
 Population, births, deaths and net migration
 German Microcensus (MC), yearly, 1% subsample
 Labour force participation rates
 Qualification and occupational structure
 Adjusted to national accounts (NA) and education statistics
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Levels of aggregation
 Age, Gender
 4 skill levels (ISCED)
 Initial vocational qualification by specialisation recoded from MC 05-08
 Results:
 Remaining labour force not in education
 New labour force supply from educational system
 New labour force supply from migration
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Fraunhofer FIT Model
Erwerbsquoten: Alte Bundesländer, ohne beruflichen Abschluss [%]
110
100
90
80
70
60
50
40
Frauen, Grundvariante
30
Männer, Grundvariante
20
10
0
15-20
20-25
25-30
30-35
35-40
40-45
45-50
50-55
55-60
60-65
65-70
70-75
75 und
älter
Alter von ... bis unter ... Jahre
Labour force not in education
Net outflows from educational system
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Labour Supply: Forecasting method
o Starting point: Basic balancing equation where t is the end of the year
(1) pt = pt-1 + bt-1 – dt-1 + it – et
with bt-1 – dt-1 = nit-1 (natural increase) and it – et = nmigt (net migration)
o Forecasting population by age, sex, qualification: not in education (pne):
(2) pnet,a,s,q= pnet-1,a-1,s,q + nit-1,a-1,s,q + nmigt,a,s,q + nedut,a,s,q
o Total population in t:
(3) pt,a,s,q= pnet-1,a-1,s,q + piet-1,a-1,s,q
o Labour force supply:
(4) lfst,a,s,q= pnet,a,s,q *lfrnet,a,s,q + piet,a,s,q *lfriet,a,s,q
 But: How are nmigt,a,s,q and nedut,a,s,q determined?
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German Educational System - Transition
model to describe stocks and flows
o Starting point: Stocks in eductational institutions
o Main Problems:
o Availability and consistency of data (MC vs. FSO and NA)
o Use of adjustment algorithms
o Basic method:
o stockt = stockt -1 + entrantst – graduatest
o Stocks at the end of one year are equal to Stocks at the beginning of the
following year
o Available information on transitions from GSOEP, FSO-Data on education, …
o … are not consistent: Again use of adjustment algorithms to determine most likely
transition structure
o Result: Transition matrix of the educational system
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German Educational System - Accounts
Year t+2
Year t+1
Year t
IAB accounting
scheme (BGR)
Colsum j in year t
= Rowsum j in year t+1
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German Educational System – Accounts
 Focus on transition
into/out of labour
market
o On main diagonal:
„Stayer“
o Off the main diagonal:
Transitions
o First three rows:
Secondary education
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Example: Stocks and Transistions
(BVM= vocational preparation scheme)
 Entrants in BVM
 Forecast BVM
 Exits in other accounts
including labour
market with transition
rates „uqxxxyyy“
xxx = source
yyy = target
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Pitfalls
 Curtailment of schooling at the Gymnasium from nine to eight years
 Suspension of compulsory military service
shares of age-specific population
 Additional school leavers and inflows in tertiary education
45
40
35
30
25
20
15
2000
2001
2002
2003
2004
2005
2006
Year
entry rate into tertiary education
Source: FSO
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graduation rate
2007
2008
2009
Selected Results for Germany
30
Results from QUBE 2010
in mil.
25
Supply
Demand
20
Completed VET
15
Tertiary sector: master craftsman, technician, higher ed.
Supply
10
Demand
Supply
5
Demand
Not completed VET
0
2005
2007
2009
2011
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2013
2015
12
2017
2019
2021
2023
2025
Thank you
www.qube-projekt.de/
http://www.fit.fraunhofer.de/fb/risk/mikmod_en.html
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