Heterogeneity in Economic Incentives and Labour Supply Responses - Documentation and Applications of MILASMEC

Abstract:

The model MILASMEC – MIcro data LAbour Supply Model of the Economic Councils – is a micro-simulation model developed by the Secretariat of the Danish Economic Councils in 2008 to analyse the labour market outcomes and distributional consequences of tax reforms. The working paper describes the main characteristics of MILASMEC, documents the considerable heterogeneity in the Danish labour market and illustrates the tradeoff for tax reforms between equity and efficiency through a discussion of a number of simulated tax reforms.