Behavioural Microsimulation and Female Labour Supply in Luxembourg

Frédéric Berger, Nizamul Islam and Philippe Liégeois

Brussels Economic Review, 2011, vol. 54, issue 4, 389-420

Abstract: In this study, the females’ labour supply is modelled as a discrete choice problem assuming that preference for leisure and consumption can be described by a quadratic utility function which allows for non-convexities in the budget set. As far as we know, such a model has never been developed in Luxembourg. We assess females’ behavioural responses to the significant changes in the tax-benefit system during 2001-2002 in Luxembourg. Only moderate impact is found, on average, on the efficiency of the economy as measured by the labour supply effects. The impact is indeed concentrated on richer single women. These increase significantly their labour force which more than doubles the non-behavioural effect of the tax reform on disposable income and boosts the gains in well-being for that part of population.

Keywords: Labour Supply; Discrete choice; Households; Microsimulation; Tax reform (search for similar items in EconPapers)
JEL-codes: C25 H24 H31 J22 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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