Behavioural microsimulation and female labour supply in Luxembourg

Publication type:

Journal Article


Frederic Berger, Nizamul Islam and Philippe Liégeois

Publication date

1 Jun 2011


In this study, the females’ labour supply is modelled as a discrete choice problem assuming that preference for leisure and consumption can be described by a quadratic utility function which allows for non-convexities in the budget set. As far as we know, such a model has never been developed in Luxembourg. We assess females’ behavioural responses to the significant changes in the tax-benefit system during 2001-2002 in Luxembourg. Only moderate impact is found, on average, on the efficiency of the economy as measured by the labour supply effects. The impact is indeed concentrated on richer single women. These increase significantly their labour force which more than doubles the non-behavioural effect of the tax reform on disposable income and boosts the gains in well-being for that part of population.

Published in

Brussels Economic Review




Labour Economics, Welfare Benefits and Microsimulation