BEHAVIORAL TAX MICROSIMULATION WITH FINITE HOURS CHOICES

It is often argued that institutional factors constrain the labour sup ply choices open to the individual. In this paper we present an altern ative to the standard neoclassical model of labour supply under the pr esumption that the number of hours choices are discrete and finite, We explore alternative specifications of discrete models of labour suppl y which are appropriate for the microsimulation of the behavioural imp act of tax policy reform. Policy simulations are carried out for a bas ic income reform. (C) 1997 Elsevier Science B.V.