Aggregating Labour Supply and Feedback Effects in Microsimulation

John Creedy and Alan Duncan

Australian Journal of Labour Economics (AJLE), 2005, vol. 8, issue 3, 277-290

Abstract: This paper explores an extention of 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. Third round effects 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 'supply response schedule', which identifies the extent to which average labour supply responds to tax changes. This is achieved using the concept of an aggregate labour supply responds to a proportional change in wage rates. The third round effect is obtained after re-running a micro simulation model with a suitable modification to individuials' wage rates. The method is illustrated using the MITTS behavioural microsimulation model.

Keywords: Time Allocation and Labor Supply (hours of work, part-time employment, temporary workers, work sharing, absenteeism, quits, work-life balance); General Aggregative Models; Forecasting and Simulation (search for similar items in EconPapers)
JEL-codes: E17 J22 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (39)

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Related works:
Working Paper: Aggregating Labour Supply and Feedback Effects in Microsimulation (2001)
Working Paper: Aggregating labour supply and feedback effects in microsimulation (2001)
Working Paper: AGGREGATING LABOUR SUPPLY AND FEEDBACK EFFECTS IN MICROSIMULATION (2001)
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