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- Title
MEASURING WELFARE CHANGES IN LABOUR SUPPLY MODELS.
- Authors
Creedy, John; Kalb, Guyonne
- Abstract
This paper examines the computation of welfare measures for use with labour supply models. The standard method of computing compensating and equivalent variations does not allow sufficiently for the nonlinearity of the budget constraint in such models. An alternative method is suggested and applied to contexts in which individuals are allowed to vary their hours continuously and to contexts where only a limited number of discrete hours of work are available. Discrete hours models have in recent years been used in view of the substantial econometric advantages when estimating the parameters of direct utility functions. This type of model is particularly popular in behavioural microsimulation modelling where predicted labour supply responses are calculated for policy changes.
- Subjects
EMPLOYMENT forecasting; LABOR supply; LABOR market; LABOR economics; EMPLOYMENT policy; ECONOMICS
- Publication
Manchester School (1463-6786), 2005, Vol 73, Issue 6, p664
- ISSN
1463-6786
- Publication type
Article
- DOI
10.1111/j.1467-9957.2005.00471.x