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A segmented labor supply model estimation for the construction of a CGE microsimulation model: An application to the Philippines

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  • Dorothée Boccanfuso

    (Département d'économique and GRÉDI, Université de Sherbrooke)

  • Luc Savard

    (Département d'économique and GRÉDI, Université de Sherbrooke)

Abstract

Labour 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.

Suggested Citation

  • Dorothée Boccanfuso & Luc Savard, 2011. "A segmented labor supply model estimation for the construction of a CGE microsimulation model: An application to the Philippines," Cahiers de recherche 11-19, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    • Handle: RePEc:shr:wpaper:11-19
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    References listed on IDEAS

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    Cited by:

    1. 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'économique de l'École de gestion à l'Université de Sherbrooke.
    2. Tabitha Mwangi, & Florence Nelima Simiyu & Lulit Mitik Beyene & Albert Onderi, 2017. "The effects of minimum wages on the labor market and income distribution in Kenya: A CGE analysis," Working Papers MPIA 2017-22, PEP-MPIA.

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    More about this item

    Keywords

    labor supply; informal sector; microsimulation; discrete choice model; Philippines;
    All these keywords.

    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, Innovation, 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; Data Access
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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