Structural Labour Supply Models and Microsimulation

Aaberge, Rolf; Colombino, Ugo

doi:10.34196/ijm.00177

Cited by 9 publications

(13 citation statements)

References 79 publications

(150 reference statements)

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“…Currently, the most widely used labour supply models for this purpose are a combination of the Random Utility Maximization (RUM) model, which use absolute comparisons of the non-marginal utility and Random Utility-Random Opportunities (RURO) models [94]. Others include: Discrete Choice (DC) and Stochastic Dynamic Programming (SDP) models.…”

Section: Methodologies Used In the Simulationsmentioning

confidence: 99%

Is There Empirical Evidence on How the Implementation of a Universal Basic Income (UBI) Affects Labour Supply? A Systematic Review

et al. 2020

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The objective of this article is to determine, as conclusively as possible, if the implementation of a Universal Basic Income (UBI) would lead to a significant reduction in the working age population labour supply. If this were true, implementation of a UBI may not be sustainable. To do this, we will compile empirical evidence from studies over the last few decades on the effects of implementation of a UBI on employment. We apply the PRISMA methodology to better judge their validity, which ensures maximum reliability of the results by avoiding biases and making the work reproducible. Given that the methodologies used in these studies are diverse, they are reviewed to contextualize the results taking into account the possible limitations detected in these methodologies. While many authors have been writing about this issue citing experiences or experiments, the added value of this article is that it performs a systematic review following a widely tested scientific methodology. Over 1200 documents that discuss the UBI/employment relationship have been reviewed. We found a total of 50 empirical cases, of which 18 were selected, and 38 studies with contrasted empirical evidence on this relationship. The results speak for themselves: Despite a detailed search, we have not found any evidence of a significant reduction in labour supply. Instead, we found evidence that labour supply increases globally among adults, men and women, young and old, and the existence of some insignificant and functional reductions to the system such as a decrease in workers from the following categories: Children, the elderly, the sick, those with disabilities, women with young children to look after, or young people who continued studying. These reductions do not reduce the overall supply since it is largely offset by increased supply from other members of the community.

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Section: Methodologies Used In the Simulationsmentioning

confidence: 99%

Is There Empirical Evidence on How the Implementation of a Universal Basic Income (UBI) Affects Labour Supply? A Systematic Review

et al. 2020

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“…In the last 25 years, discrete choice models of the labour supply -those where agents make a constrained choice from a set with relatively few alternatives -have become a standard tool for obtaining labour supply responses in behavioural microsimulation (Creedy and Duncan, 2002;Aaberge and Colombino, 2018). In comparison to the traditional approach based on marginal calculus (eg, Hausman, 1985), the discrete choice approach makes it easier to handle non-linear and non-convex budget constraints, and it also allows the use of more flexible functional forms for the utility function (Creedy and Kalb, 2005).…”

Section: Labour Supply Modelling Approachmentioning

confidence: 99%

“…In regard to the effects of the personal income tax, social insurance contributions and social benefits, the crucial behaviour of interest is the labour supply, and there is a large and growing literature on the effects of taxes and social benefits on the labour supply, whether it is considered to be mere employment, hours of work or taxable income (Meghir and Phillips, 2009;Keane, 2011;Saez et al, 2012;Lundberg and Norell, 2018). The practice of modelling household labour supply accounting explicitly for the tax-benefit system and of using such models for microsimulation with labour supply responses has gained wide-spread popularity since van Soest (1995) seminal contribution on the discrete choice labour supply modelling framework (Creedy and Duncan, 2002;Creedy and Kalb, 2005;Aaberge and Colombino, 2018).…”

Section: Introductionmentioning

confidence: 99%

Making work pay in Croatia: An exante evaluation of two in-work benefits using miCROmod

Bezeredi¹,

Ledić²,

Rubil³

et al. 2018

IJM

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The aim of this paper is twofold. First, we introduce miCROmod, the most recent and comprehensive tax-benefit microsimulation model for Croatia. The focus of this paper is on its behavioural component, a structural labour supply model. Unlike in the standard discrete choice models, where labour supply follows from the agent's choice of work/leisure hours only, in our model, labour supply follows from the agent's choice from a set of jobs, which are characterised by work hours and a set of non-pecuniary job attributes that are unobserved by the researcher. In addition to the budget constraint, the agent faces constraints in the form of labour market opportunities. Second, we use the behavioural tax-benefit model to simulate the effects on the labour supply of couples and the income distribution of the introduction of in-work benefits-transfers conditional on working a certain number of hours. The following two benefits are considered: a family-based benefit imported from the UK, which is income-tested at the family level, and an individual-based benefit from Slovakia, which is income-tested at the individual level. According to the results, both are redistributive towards the needy. However, while the individual-based benefit increases the labour supply, the family-based benefit reduces it, contrary to its very purpose. An implication is that countries considering introducing an in-work benefit and that have most of their social transfers income-tested at the family level should be aware that family-level income-testing of in-work benefits might not improve work incentives, or might even harm them, especially if the benefits are generous.

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“…Although major changes in government tax and transfers policies are likely to produce behavioral responses, static microsimulations have remained a standard method to assess their impacts because they offer the practical advantage of producing transparent estimates without relying on difficult to verify assumptions about how individuals will respond to policy changes. Similarly, although we recognize that 18 For a review and comparison with dynamic models in the labor context, see Aaberge and Colombino (2018). 19 Although the static assumptions in tax expenditure estimation are relaxed in some academic work (Gale et al, 2007), the starting point for analyses is always static and relaxing assumptions comes with problems (e.g., with the mortgage interest deduction, one must assume portfolio re-balancing once the tax break is no longer available, but the problem is that most households could re-balance their portfolio even with the mortgage interest deduction to reduce their tax bill).…”

Section: Introductionmentioning

confidence: 99%

Rethinking Law School Tenure Standards

Chilton¹,

Masur²,

Rozema³

2021

The Journal of Legal Studies

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Academic departments decide on tenure standards with limited evidence about their accuracy and efficacy. We study the implications of stricter tenure standards in law schools, an environment in which 95 percent of all tenure track hires receive tenure. To do so, we construct a novel dataset of the articles and citation counts of 1,720 law professors who were granted tenure at top-100 law schools between 1970 and 2007. We first show that pre-tenure research records are highly predictive of future academic impact. We then simulate the costs and benefits of applying stricter tenure standards using predictions of law professors' future academic impact at the time of their tenure decision. Of faculty members not tenured under stricter standards, only 5 percent have greater future academic impacts than their counterfactual replacements. Moreover, increasing tenure denials by 10 percentage points would increase the academic impact of a school's median professor by over 50 percent.

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Structural Labour Supply Models and Microsimulation

Cited by 9 publications

References 79 publications

Is There Empirical Evidence on How the Implementation of a Universal Basic Income (UBI) Affects Labour Supply? A Systematic Review

Is There Empirical Evidence on How the Implementation of a Universal Basic Income (UBI) Affects Labour Supply? A Systematic Review

Making work pay in Croatia: An exante evaluation of two in-work benefits using miCROmod

Rethinking Law School Tenure Standards

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