Discussion Papers no. 877

Structural Labour Supply Models and Microsimulation

The purpose of the paper is to provide a discussion of the various approaches for accounting for labour supply responses in microsimulation models.

The paper focus attention on two methodologies for modelling labour supply:

  • The discrete choice model

  • The random utility – random opportunities model

The paper then describes approaches to utilising these models for policy simulation in terms of producing and interpreting simulation outcomes, outlining an extensive literature of policy analyses utilising these approaches. Labour supply models are not only central for analyzing behavioural labour supply responses but also for identifying optimal tax-benefit systems, given some of the challenges of the theoretical approach. Combining labour supply results with individual and social welfare functions enables the social evaluation of policy simulations. Combining welfare functions and labour supply functions, the paper discusses how to model socially optimal income taxation.


About the publication


Structural Labour Supply Models and Microsimulation


Rolf Aaberge and Ugo Colombino

Series and number

Discussion Papers no. 877


Statistisk sentralbyrå


Discussion Papers



Number of pages


About Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.