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Behavioural Microsimulation with Labour Supply Responses
Author(s) -
Creedy John,
Duncan Alan
Publication year - 2002
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/1467-6419.00158
Subject(s) - microsimulation , endogeneity , economics , labour supply , welfare , shock (circulatory) , econometrics , work (physics) , estimation , budget constraint , microeconomics , engineering , market economy , medicine , mechanical engineering , management , transport engineering
This paper provides a technical survey of recent developments in behavioural microsimulation. We discuss the criteria by which models of labour supply may be chosen for application to behavioural microsimulation, and consider how such models may be augmented to control for fixed costs, child–related work costs, preference heterogeneity and endogeneity in wages. We describe methods by which non–linear budget constraints may be accommodated in estimation, policy simulations and welfare analysis, and discuss how stochastic terms may be factored into the simulation of behavioural responses to a policy shock.