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A behavioral microsimulation model with discrete labour supply for Italian couples


  • Daniele Pacifico



The aim of this paper is to introduce labour supply behaviour in an arithmetic microsimulation model so as to take into account changes in labour supply when a new policy is evaluated. I explore the performance of a labour supply estimation method based on a discrete choice set. The idea behind this approach is to work directly with preferences instead of labour supply functions. The main advantage of the discrete approach is the possibility of dealing easily with non-convex budget sets and joint labour supply. This let the discrete approach relatively suitable for policy evaluation purposes. I use the papers from Blundell, Dancan, McCrae and Meghir (1999) and Brewer, Duncan Shepard and Suarez (2006) as main references for the structural microeconometric model. Several innovative elements are taken into account with respect previous Italian studies. In particular, I allow for errors in the predicted wage for non-workers, unobserved heterogeneity in preferences, unobserved monetary fixed costs of working and child-care demand. The model is fully parametric and the Simulated Maximum Likelihood approach is used to approximate multidimensional integrals. An overview of the STATA routine for the maximum likelihood estimation is also presented. The elasticities of labour supply for married men and women are computed and discussed.

Suggested Citation

  • Daniele Pacifico, 2009. "A behavioral microsimulation model with discrete labour supply for Italian couples," Center for the Analysis of Public Policies (CAPP) 0065, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
  • Handle: RePEc:mod:cappmo:0065

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    References listed on IDEAS

    1. Howells, Jeremy, 2006. "Intermediation and the role of intermediaries in innovation," Research Policy, Elsevier, vol. 35(5), pages 715-728, June.
    2. Russo, Margherita & Rossi, Federica, 2008. "Cooperation networks and innovation: A complex system perspective to the analysis and evaluation of a EU regional innovation policy programme," MPRA Paper 10156, University Library of Munich, Germany.
    3. Abdullah Gök & Jakob Edler, 2012. "The use of behavioural additionality evaluation in innovation policy making," Research Evaluation, Oxford University Press, vol. 21(4), pages 306-318, September.
    4. Nathalie Lazaric & Christian Longhi & Catherine Thomas, 2008. "Gatekeepers of Knowledge versus Platforms of Knowledge: From Potential to Realized Absorptive Capacity," Regional Studies, Taylor & Francis Journals, vol. 42(6), pages 837-852.
    5. Martina Kauffeld-Monz & Michael Fritsch, 2013. "Who Are the Knowledge Brokers in Regional Systems of Innovation? A Multi-Actor Network Analysis," Regional Studies, Taylor & Francis Journals, vol. 47(5), pages 669-685, May.
    6. Martina Kauffeld-Monz & Michael Fritsch, 2008. "Who are the brokers of knowledge in regional systems of innovation? A multi-actor network analysis," Jena Economic Research Papers 2008-089, Friedrich-Schiller-University Jena.
    7. Jari Hyvärinen & Anna-Maija Rautiainen, 2007. "Measuring additionality and systemic impacts of public research and development funding — the case of TEKES, Finland," Research Evaluation, Oxford University Press, vol. 16(3), pages 205-215, September.
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    Cited by:

    1. Alan S Duncan & Mark N Harris & Anthony Harris & Eugenio Zucchelli, 2013. "The Influence of Psychological Well-being, Ill Health and Health Shocks on Single Parents' Labour Supply," Bankwest Curtin Economics Centre Working Paper series WP1307, Bankwest Curtin Economics Centre (BCEC), Curtin Business School.

    More about this item


    Microsimulation; Household labour supply; discrete choice;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • 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


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