TY  - RPRT
        AU  - Aaberge, Rolf
AU  - Colombino, Ugo
        TI  - Structural Labour Supply Models and Microsimulation
        PY  - 2018/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 11562
        UR  - https://www.iza.org/publications/dp11562
        AB  - 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.
        KW  - discrete choice
KW  - labour supply
KW  - behavioural microsimulation
KW  - tax reforms
        ER  -