Aggregating Labour Supply and Feedback Effects in Microsimulation

John Creedy, Alan Duncan

Research output: Contribution to Newspaper/Magazine/BulletinArticle

Abstract

This paper extends behavioural microsimulation modelling so that third round effects of a policy change can be simulated. The first round effects relate to fixed hours of work, while second round effects allow for changes in desired hours of work at unchanged wages. These allow for endogenous changes to the distribution of wage rates resulting from the labour supply responses to tax changes. This is achieved using the concept of an aggregate ѳupply response scheduleҬ which identifies the extent to which average labour supply responds to a proportional change in wage rates. The third round effect is obtained after re-running a microsimulation model with a suitable modification to individuals' wage rates. The method is illustrated using the MITTS behavioural microsimulation model
Original languageEnglish
Pages277-290
Number of pages14
Volume8
Specialist publicationInstitute for Fiscal Studies. Working Papers (Online)
DOIs
Publication statusPublished - 2001
Externally publishedYes

Fingerprint

Microsimulation
Labor supply
Feedback effect
Wage rate
Hours of work
Wages
Policy change
Modeling
Tax
Supply response
Schedule

Cite this

@misc{9f4b619df1844068a99e8da088e81fbf,
title = "Aggregating Labour Supply and Feedback Effects in Microsimulation",
abstract = "This paper extends behavioural microsimulation modelling so that third round effects of a policy change can be simulated. The first round effects relate to fixed hours of work, while second round effects allow for changes in desired hours of work at unchanged wages. These allow for endogenous changes to the distribution of wage rates resulting from the labour supply responses to tax changes. This is achieved using the concept of an aggregate ѳupply response scheduleҬ which identifies the extent to which average labour supply responds to a proportional change in wage rates. The third round effect is obtained after re-running a microsimulation model with a suitable modification to individuals' wage rates. The method is illustrated using the MITTS behavioural microsimulation model",
author = "John Creedy and Alan Duncan",
year = "2001",
doi = "10.1920/wp.ifs.2001.0124",
language = "English",
volume = "8",
pages = "277--290",
journal = "Institute for Fiscal Studies. Working Papers (Online)",
issn = "1742-0415",
publisher = "Institute for Fiscal Studies",

}

Aggregating Labour Supply and Feedback Effects in Microsimulation. / Creedy, John; Duncan, Alan.

In: Institute for Fiscal Studies. Working Papers (Online), Vol. 8, 2001, p. 277-290.

Research output: Contribution to Newspaper/Magazine/BulletinArticle

TY - GEN

T1 - Aggregating Labour Supply and Feedback Effects in Microsimulation

AU - Creedy, John

AU - Duncan, Alan

PY - 2001

Y1 - 2001

N2 - This paper extends behavioural microsimulation modelling so that third round effects of a policy change can be simulated. The first round effects relate to fixed hours of work, while second round effects allow for changes in desired hours of work at unchanged wages. These allow for endogenous changes to the distribution of wage rates resulting from the labour supply responses to tax changes. This is achieved using the concept of an aggregate ѳupply response scheduleҬ which identifies the extent to which average labour supply responds to a proportional change in wage rates. The third round effect is obtained after re-running a microsimulation model with a suitable modification to individuals' wage rates. The method is illustrated using the MITTS behavioural microsimulation model

AB - This paper extends behavioural microsimulation modelling so that third round effects of a policy change can be simulated. The first round effects relate to fixed hours of work, while second round effects allow for changes in desired hours of work at unchanged wages. These allow for endogenous changes to the distribution of wage rates resulting from the labour supply responses to tax changes. This is achieved using the concept of an aggregate ѳupply response scheduleҬ which identifies the extent to which average labour supply responds to a proportional change in wage rates. The third round effect is obtained after re-running a microsimulation model with a suitable modification to individuals' wage rates. The method is illustrated using the MITTS behavioural microsimulation model

U2 - 10.1920/wp.ifs.2001.0124

DO - 10.1920/wp.ifs.2001.0124

M3 - Article

VL - 8

SP - 277

EP - 290

JO - Institute for Fiscal Studies. Working Papers (Online)

JF - Institute for Fiscal Studies. Working Papers (Online)

SN - 1742-0415

ER -