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LABORsim: An Agent-Based Microsimulation of Labour Supply – An Application to Italy

Author

Listed:
  • Roberto Leombruni
  • Matteo Richiardi

Abstract

Most Oecd Countries are experiencing a rapid population ageing. Italy adds to this picture a very low labour market participation of the elders, so that most projections of the impact of ageing on the labour market are rather pessimistic. However, there are other long run modifications currently underway that will presumably have a sizeable impact on the labour market, above all changes in the retirement legislation, in educational choices and participation behaviour. In this paper we present LABORsim, an agent based microsimulation model of labour supply, which offers new insights on the likely evolution of the labour force in the next decades in Italy. LABORsim integrates the current demographic projections with simulation modules modelling retirement rules, retirement behaviours, migrations, education and participation choices, plus a consolle to implement various policy scenario analyses. When all these factors are taken into account, projections for next decades are not that pessimistic. In most scenarios, the overall participation rate is expected to increase steadily for the next two decades, while shortages in the labour force supply and an unfavourable dynamics for the economic dependency rate are expected to show up only after 2020, when the baby boom generations will arrive at their retirement ages. This is not enough, however, to allow Italy to meet the EU Stockolm and Lisbon targets for male and female employment rates for many decades to come. The sharp increase in the participation rates for the elderly (aged 55-64), mainly driven by the recent changes in the retirement eligibility criteria, will make it possible to meet the Stockholm target of 50% employment rate in this age group by 2015, i.e. with only 5 years of delay.
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Suggested Citation

  • Roberto Leombruni & Matteo Richiardi, 2006. "LABORsim: An Agent-Based Microsimulation of Labour Supply – An Application to Italy," Computational Economics, Springer;Society for Computational Economics, vol. 27(1), pages 63-88, February.
  • Handle: RePEc:kap:compec:v:27:y:2006:i:1:p:63-88
    DOI: 10.1007/s10614-005-9016-0
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    References listed on IDEAS

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    1. Angelo Marano & Paolo Sestito, 2004. "Older workers and pensioners: the challenge of ageing on the Italian public pension system and labour market," CeRP Working Papers 32, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    2. Raffaele Miniaci, 1998. "Microeconometric Analysis of the Retirement Decision: Italy," OECD Economics Department Working Papers 205, OECD Publishing.
    3. Michele Boldrin & Sergi Jiménez-Martín & Franco Peracchi, 2004. "Micro-Modeling of Retirement Behavior in Spain," NBER Chapters,in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 499-578 National Bureau of Economic Research, Inc.
    4. Agar Brugiavini & Franco Peracchi, 2003. "Social Security Wealth and Retirement Decisions in Italy," LABOUR, CEIS, vol. 17(SpecialIs), pages 79-114, August.
    5. Spataro, Luca, 2005. "Social security incentives and retirement decisions in Italy: An empirical insight," Research in Economics, Elsevier, vol. 59(3), pages 223-256, September.
    6. Tesfatsion, Leigh, 2001. "Agent-Based Computational Economics: A Guide to the Literature," Staff General Research Papers Archive 1974, Iowa State University, Department of Economics.
    7. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1.
    8. Colombino, Ugo & Hernæs, Erik & Jia, Zhiyang & Strom, Steinar, 2003. "Retirement in Italy and Norway," Memorandum 10/2003, Oslo University, Department of Economics.
    9. Leigh Tesfatsion, 2000. "Agent-Based Computational Economics: A Brief Guide to the Literature," Computational Economics 0004001, EconWPA.
    10. Cathal O'Donoghue, 2001. "Dynamic Microsimulation: A Methodological Survey," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 4(2), December.
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    Cited by:

    1. repec:ijm:journl:v10:y:2017:i:1:p:106-134 is not listed on IDEAS
    2. Roberto Leombruni & Michele Mosca, 2011. "The lifetime gender gap in Italy. Do the pension system countervails labour market outcomes?," LABORatorio R. Revelli Working Papers Series 113, LABORatorio R. Revelli, Centre for Employment Studies.
    3. Matteo Richiardi & Ross E. Richardson, 2017. "JAS-mine: A new platform for microsimulation and agent-based modelling," International Journal of Microsimulation, International Microsimulation Association, vol. 10(1), pages 106-134.
    4. Juan Manuel Larrosa, 2016. "Agentes computacionales y análisis económico," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 18(34), pages 87-113, January-J.
    5. Leombruni Roberto & Mosca Michele, 2013. "The lifetime gender gap in Italy. Does the pension system countervail labour market outcomes?," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201302, University of Turin.
    6. Mathias Dolls & Karina Doorley & Alari Paulus & Hilmar Schneider & Sebastian Siegloch & Eric Sommer, 2017. "Fiscal sustainability and demographic change: a micro-approach for 27 EU countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(4), pages 575-615, August.
    7. repec:spr:italej:v:3:y:2017:i:3:d:10.1007_s40797-017-0065-z is not listed on IDEAS
    8. Farooq, Bilal & Miller, Eric J. & Chingcuanco, Franco & Giroux-Cook, Martin, 2013. "Microsimulation framework for urban price-taker markets," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 6(1), pages 41-51.
    9. Jinjing Li & Cathal O'Donoghue, 2013. "A survey of dynamic microsimulation models: uses, model structure and methodology," International Journal of Microsimulation, International Microsimulation Association, vol. 6(2), pages 3-55.
    10. Meritxell Solé & Guadalupe Souto & Concepció Patxot, 2018. "Sustainability and adequacy of the Spanish pension system after the 2013 reform: a microsimulation analysis," UB Economics Working Papers 2018/372, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    11. repec:ijm:journl:v109:y:2017:i:1:p:106-134 is not listed on IDEAS
    12. Giovanni Dosi & Andrea Roventini, 2017. "Agent-Based Macroeconomics and Classical Political Economy: Some Italian Roots," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(3), pages 261-283, November.
    13. Hänisch, Carsten & Klos, Jonas, 2016. "Long-run effects of career interruptions: A micro-simulation study," Discussion Paper Series 2016-03, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    14. Elisa Baroni & Matteo Richiardi, 2007. "Orcutt’s Vision, 50 years on," LABORatorio R. Revelli Working Papers Series 65, LABORatorio R. Revelli, Centre for Employment Studies.
    15. Oliver Mannion & Roy Lay-Yee & Wendy Wrapson & Peter Davis & Janet Pearson, 2012. "JAMSIM: a Microsimulation Modelling Policy Tool," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 15(1), pages 1-8.

    More about this item

    Keywords

    microsimulation; participation; employment; retirement; education; policy evaluation;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I2 - Health, Education, and Welfare - - Education
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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