A segmented labor supply model estimation for the construction of a CGE microsimulation model: An application to the Philippines
AbstractLabour market analysis is an important element to understand the inequality and poverty within a given population. The literature reveals that the informal sector is characterised by a great deal of flexibility and exempt from formal market rigidities but on the other hand, this sector can constitute a trap from which it is difficult to exit for workers active in the sector with low wages. In this paper we aim to identify the main characteristics differentiating the labor supply of workers on the informal and formal market in the Philippines while estimating these two labor supplies, capturing discrete choice or changes in employment status. We use these estimates to construct a labor supply model that can serve as an input for a broader macro-microsimulation model applied to the Philippines. The results of the estimation provide relatively intuitive findings, highlighting some differences between the two markets. We also contribute to shedding some light into this macro-microsimulation modelling framework that is generally opaque in describing how to construct a microsimulation model with endogenous discrete choice model linked to a CGE model.
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Bibliographic InfoPaper provided by Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke in its series Cahiers de recherche with number 11-19.
Length: 29 pages
Date of creation: Nov 2011
Date of revision:
labor supply; informal sector; microsimulation; discrete choice model; Philippines;
Find related papers by JEL classification:
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
- NEP-CMP-2012-01-03 (Computational Economics)
- NEP-DCM-2012-01-03 (Discrete Choice Models)
- NEP-IUE-2012-01-03 (Informal & Underground Economics)
- NEP-LAB-2012-01-03 (Labour Economics)
- NEP-LMA-2012-01-03 (Labor Markets - Supply, Demand, & Wages)
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- Fanny Moffette & Dorothée Boccanfuso & Patrick Richard & Luc Savard, 2013. "Estimating the Impact of the Québec’s Work Incentive Program on Labour Supply: An Ex Post Microsimulation Analysis," Cahiers de recherche 13-01, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
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