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Simulating Household Savings and Labour Supply: an Application of Dynamic Programming

Published online by Cambridge University Press:  26 March 2020

James Sefton  and
Justin van de Ven
James Sefton*
Affiliation:
The Business School, Imperial College London, and National Institute of Economic and Social Research
Justin van de Ven*
Affiliation:
National Institute of Economic and Social Research
*
e-mail: jsefton@niesr.ac.uk
e-mail: jvandeven@niesr.ac.uk
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Abstract

This paper describes a fully behavioural microsimulation model that has recently been developed at the National Institute for considering responses to changes in pension policy of household savings and labour supply. The model generates household decisions regarding labour/leisure, and consumption/savings by solving a dynamic programming problem over the simulated lifetime. This analytical framework incorporates a degree of complexity that is usually omitted from econometric analyses that are common in the literature.

Type
Journal Article
Information
National Institute Economic Review , Volume 188 , April 2004 , pp. 56 - 72
Copyright
Copyright © 2004 National Institute of Economic and Social Research

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