Pacifico, Daniele (2009): A behavioral microsimulation model with discrete labour supply for Italian couples.
Download (746kB) | Preview
The aim of this paper is to introduce labour supply behaviour in an arithmetic microsimulation model so as to take into account changes in labour supply when a new policy is evaluated. I explore the performance of a labour supply estimation method based on a discrete choice set. The idea behind this approach is to work directly with preferences instead of labour supply functions. The main advantage of the discrete approach is the possibility of dealing easily with non-convex budget sets and joint labour supply. This let the discrete approach relatively suitable for policy evaluation purposes. I use the papers from Blundell, Dancan, McCrae and Meghir (1999) and Brewer, Duncan Shepard and Suarez (2006) as main references for the structural microeconometric model. Several innovative elements are taken into account with respect previous Italian studies. In particular, I allow for errors in the predicted wage for non-workers, unobserved heterogeneity in preferences, unobserved monetary ﬁxed costs of working and child-care demand. The model is fully parametric and the Simulated Maximum Likelihood approach is used to approximate multidimensional integrals. An overview of the STATA routine for the maximum likelihood estimation is also presented. The elasticities of labour supply for married men and women are computed and discussed.
|Item Type:||MPRA Paper|
|Original Title:||A behavioral microsimulation model with discrete labour supply for Italian couples|
|Keywords:||Microsimulation; Household labour supply; discrete choice|
|Subjects:||H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J22 - Time Allocation and Labor Supply
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H24 - Personal Income and Other Nonbusiness Taxes and Subsidies
|Depositing User:||Daniele Pacifico|
|Date Deposited:||22. Mar 2009 01:56|
|Last Modified:||12. Feb 2013 16:05|
Aaberge, R., U. Colombino, and S. Stroem, “ Labour supply in Italy: an empirical analysis of joint household decisions, with taxes and quantity constraints,” Journal of Applied Econometrics, 1999, 14 (4), 403–422.
Baldini, M. and P. Bosi, “ Flat Rate Tax, Dividendo sociale e riforma dei programmi di spesa di assistenza,” Rivista internazionale di scienze sociali, 2002.
Baldini M., Bosi P. and Paciﬁco D. “ Gli eﬀetti distributivi dei trasferimenti In Kind: il caso dei servizi educativi e sanitari,” Poverta e Benessere, una geograﬁa delle diseguaglianze in Italia, 2007, pp. 401–422.
Blundell, R., A. Duncan, J. McCrae, and C. Meghir, “ Evaluating In-Work Beneﬁt Reform: The Working Families Tax Credit in the UK,” Institute for Poverty Research Conference, North Western University, November, 1999.
Blundell R. and MaCurdy T. “ Labor Supply: A Review of Alternative Approaches,” HANDBOOKS IN ECONOMICS, 1999, 5 (3 PART A), 1559–1696.
Del Boca D. and Vuri A. “ Labor Supply and Child Care Costs: The Eﬀect of Rationing,” 2005.
Brandolini, A., The Distribution of Personal Income in Post-war Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality, Banca d’Italia, 1999.
Breunig, Cobb-Clark, and Gong, “Improving the Modeling of Couples’ Labour Supply,” CEPR Discussion Papers 499, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University September 2005.
Brewer, M., A. Duncan, A. Shephard, and M.J. Suárez, “ Did working families’ tax credit work? The impact of in-work support on labour supply in Great Britain,” Labour Economics, 2006, 13 (6), 699–720.
Cappellari, L. and S.P. Jenkins, “ Calculation of Multivariate Normal Probabilities By Simulation, With Applications to Maximum Simulated Likelihood Estimation.”
Creedy, J. and A. Duncan, “ Behavioural Microsimulation with Labour Supply Responses,” Journal of Economic Surveys, 2002, 16 (1), 1–39.
Creedy J. and G. Kalb, “ Discrete Hours Labour Supply Modelling: Speciﬁcation, Estimation and Simulation,” Journal of Economic Surveys, 2005, 19 (5), 697– 734.
Gould, W., J. Pitblado, and W. Sribney, Maximum Likelihood Estimation with Stata, Stata Press, 2006.
Green, W.H., Econometric Analysis (7 th), Upper Saddle River, NJ: Prentice Hall, 2007.
Haan, P., Discrete Choice Labor Supply: Conditional Logit Vs. Random Coefﬁcient Models, DIW, 2004.
Keane, M. and R. Moﬃtt, “ A Structural Model of Multiple Welfare Program Participation and Labor Supply,” International Economic Review, 1998, 39 (3), 553–589.
Labeaga, JM., X. Oliver, and A. Spadaro, “ Discrete Choice Models of Labour Supply, Behavioural Microsimulation and the Spanish Tax Reforms,” Journal of Economic Inequality.
Mancini, A.L., “ Labor Supply Responses of Italian Women to Minimum Income Policies,” Working Paper 94, ECINEQ, Society for the Study of Economic Inequality., 2008.
Manning, A. and B. Petrongolo, The Part-time Pay Penalty, Department of Trade and Industry, 2004.
McFadden, D., Conditional Logit Analysis of Qualitative Choice Behavior, Institute of Urban and Regional Development, University of California, 1973.
Soest, A. Van, “ Structural Models of Family Labor Supply: A Discrete Choice Approach,” JOURNAL OF HUMAN RESOURCES, 1995, 30 (1), 63–88.
Train, K., Discrete Choice Methods with Simulation, Cambridge University Press, 2003.