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Behavioural Microsimulation and Female Labour Supply in Luxembourg

Author

Listed:
  • Frédéric Berger
  • Nizamul Islam
  • Philippe Liégeois

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.

Suggested Citation

  • Frédéric Berger & Nizamul Islam & Philippe Liégeois, 2011. "Behavioural Microsimulation and Female Labour Supply in Luxembourg," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 54(4), pages 389-420.
  • Handle: RePEc:bxr:bxrceb:2013/122845
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    Cited by:

    1. Islam, Nizamul & Flood, Lennart, 2015. "A Tax Benefit Model for Policy Evaluation in Luxembourg: LuxTaxBen," IZA Discussion Papers 9152, Institute for the Study of Labor (IZA).
    2. Liégeois, Philippe & Islam, Nizamul, 2013. "Dealing with negative marginal utilities in the discrete choice modeling of labor supply," Economics Letters, Elsevier, vol. 118(1), pages 16-18.

    More about this item

    Keywords

    Labour Supply; Discrete choice; Households; Microsimulation; Tax reform;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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