Structural Labour Supply Models and Microsimulation

Arbeitspapier

The purpose of the paper is to provide a discussion of the various approaches for accounting for labour supply responses in microsimulation models. The paper focuses attention on two methodologies for modelling labour supply: the discrete choice model and the random utility – random opportunities model. The paper then describes approaches to utilising these models for policy simulation in terms of producing and interpreting simulation outcomes, outlining an extensive literature of policy analyses utilising these approach. Labour supply models are not only central for analyzing behavioural labour supply responses but also for identifying optimal tax-benefit systems, given some of the challenges of the theoretical approach. Combining labour supply results with individual and social welfare functions enables the social evaluation of policy simulations. Combining welfare functions and labour supply functions, the paper discusses how to model socially optimal income taxation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 11562

Classification and Topics

• Classification: Wirtschaft ; Econometric Modeling: General ; Household Behavior: General ; Personal Income, Wealth, and Their Distributions ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Fiscal Policies and Behavior of Economic Agents: Household ; Demand and Supply of Labor: General
• Subject: behavioural microsimulation ; labour supply ; discrete choice ; tax reforms

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aaberge, Rolf ; Colombino, Ugo
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/180580
• Last update: 10.03.2025, 11:43 AM CET