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Simulating Household Savings and Labour Supply: an Application of Dynamic Programming
Published online by Cambridge University Press: 26 March 2020
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.
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- Copyright © 2004 National Institute of Economic and Social Research
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