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Microsimulating the labour market: a prototype

Author

Listed:
  • M. BARLET

    (Insee)

  • D. BLANCHET

    (Insee)

  • T. LE BARBANCHON

    (Insee)

Abstract

Several tools are routinely used to predict or analyze the impact of employment policies: macroeconometric models, small-scale GE models, ex post evaluations based either on macroeconomic time series or on microeconomic data. We present here a new instrument whose methodology is intermediate between traditional microsimulation and the more recent agent-based approach to economic modelling. The prototype that we have built simulates job creations and destructions, labour force ageing and renewal, the dynamic matching process between jobs and individuals, and a basic process of wage negotiation for insiders. These processes take place under constraints of profitability and global demand by types of goods/skills. The model has been calibrated to reproduce some stylized characteristics of French unemployment and private salaried employment. It is then applied to the simulation of a certain number of shocks: a demographic shock, a shock on the minimum wage, or changes in employers’ social security contributions. The model is able to produce results that are comparable to those provided by existing tools, but it has a stronger potential for analysing detailed consequences of employment policies. A more comprehensive version of such a model would be a useful addition to the toolkit that is currently available to labour market analysts.

Suggested Citation

  • M. Barlet & D. Blanchet & T. Le Barbanchon, 2008. "Microsimulating the labour market: a prototype," Documents de Travail de l'Insee - INSEE Working Papers g2008-12, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2008-12
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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p06zr04x/f1.pdf
    File Function: Document de travail de la DESE numéro G2008/12
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    More about this item

    Keywords

    ACE models; microsimulation; labour market; employers’ contributions;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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