Autore
Colombino, UgoTitolo
Equilibrium simulation with microeconometric models. A new procedure with an application to income support policiesPeriodico
Università degli studi di Torino. Dip. Di Economia e Statistica Cognetti de Martiis. Working paper seriesAnno:
2012 - Volume:
6 - Fascicolo:
9 - Pagina iniziale:
1 - Pagina finale:
32Many microeconometric models of discrete labour supply include alternative-specific constants meant to account for (possibly besides other factors) the density or accessibility of particular types of jobs
(e.g. part-time jobs vs. full-time jobs). The most common use of these models is the simulation of tax-transfer reforms. The simulation is usually interpreted as a comparative statics exercise, i.e. the
comparison of different equilibria
induced by different policy regimes. The simulation procedure, however, typically keeps fixed the estimated alternative-specific constants. In this note we argue that this procedure is not consistent with the comparative statics interpretation. Since the constants reflect the number of jobs and since the number of people willing to work changes as a response to the
change in tax-transfer regime, the new equilibrium induced by the reform implies that the constants should also change. A structural interpretation of the alternative-specific constants leads to the development of a simulation procedure consistent with the comparative statics interpretation. The
procedure is illustrated with a simulation of alternative reforms of the income support policies in Italy.
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