Figures and tables in EUROLAB: A Multidimensional Labour Supply-Demand Model for EU Countries

Abstract

This paper describes EUROLAB, a labour supply-demand microsimulation model that relies on EUROMOD, the static microsimulation model for the European Union countries. EUROLAB is built on a multidimensional discrete choice model of labour supply and accounts for unemployment. As distinct from non-participation. The model estimates individual changes in supplied hours of work and participation as a reaction to a hypothetical or real tax-transfer reform, often referred to in the literature as “second-order” effects. Furthermore, the model allows for the demand-side effects of a labour market that, depending on how elastic it is, would lead to different employment levels and wage rates when the market reaches its equilibrium. The model is unique in covering 27 countries under the same specification of preferences, opportunity set representation and the same concept of income and working hours. We illustrate the usefulness of the model by showing several examples of EUROLAB, using both the one-dimensional and multidimensional versions. Potential extensions of the model are also discussed in the paper.

This article contains 2 figures and 9 tables.

Figures

**Figure 1.** A snapshot of EUROLAB Configuration

Tables

Table A1. Conditional Logit results

	Couples	Single Women	Single Men
clogit dependent variable
In-work dummy Male	-1.069^* (-2.51)		-0.0994 (-0.39)
Part-time dummy - Male	-2.935^*** (-8.65)		-2.255^*** (-9.94)
Full-time dummy - Male	-0.0331 (-0.16)		0.633^*** (3.33)
Over-time dummy - Male	0.877^*** (3.92)		1.637^*** (7.66)
In-work dummy Female	0.537^** (2.62)	0.329 (1.33)
Part-time dummy - Female	-1.188^*** (-11.33)	-0.953^*** (-5.74)
Full-time dummy - Female	0.681^*** (5.62)	1.447^*** (8.01)
Over-time dummy - Female	0.364^* (2.45)	1.366^*** (6.65)
Leisure - Male	0.0866 (1.42)		0.0250 (0.80)
Leisure square - Male	-0.000653 (-1.85)		0.000415 (1.69)
Leisure x age - Male	-0.00477^* (-2.23)		-0.00286^** (-3.03)
Leisure x age square - Male	0.0000631^** (2.81)		0.0000359^** (3.27)
Leisure x #children - Male	-0.00575^* (-1.98)		0.00407 (0.66)
Leisure x #children < 3 year - Male	-0.00197 (-0.22)		-0.0151 (-0.22)
Leisure x #children 3-6 year - Male	-0.000181 (-0.02)		-0.0183 (-0.45)
Leisure x Migrant - Male	-0.0150 (-1.70)		-0.0247^*** (-4.78)
Leisure x Mortgage - Male	-0.000614^* (-2.20)		-0.000482 (-1.44)
Leisure - Female	0.123^** (2.93)	0.00382 (0.11)
Leisure square - Female	-0.000759^*** (-3.45)	0.00117^*** (4.54)
Leisure x age - Female	-0.00127 (-0.80)	-0.00550^*** (-4.91)
Leisure x age square - Female	0.0000133 (0.73)	0.0000671^*** (5.26)
Leisure x #children - Female	0.00464^* (2.33)	0.0118^*** (3.65)
Leisure x #children < 3 year - Female	0.00702 (1.40)	0.0148 (1.62)
Leisure x #children 3-6 year - Female	0.00108 (0.26)	0.00789 (0.92)
Leisure x Migrant - Female	-0.0121^* (-2.02)	-0.0278^*** (-5.68)
Leisure x Mortgage - Female	-0.000177 (-1.06)	-0.000427 (-1.30)
Leisure Male x Leisure Female	0.000768^*** (5.14)
Net income	0.0109^*** (13.44)	0.00794^*** (10.66)	0.00542^*** (9.54)
Net income square	-0.00000277^*** (-16.92)	-0.00000271^*** (-7.37)	-0.00000198^*** (-8.51)
Net income x household size	0.000256 (1.93)	0.000463 (1.86)	0.000783^*** (3.89)
Net income x Leisure - Male	-0.0000234^** (-3.26)		0.00000576 (1.05)
Net income x Leisure - Female	-0.0000389^*** (-7.36)	0.00000760 (1.13)
Observations	217216	24024	26168
ll	-10420.5	-4878.9	-4924.8
r2_p	0.262	0.219	0.276
aic	20904.9	9791.7	9883.6
bic	21234.2	9929.2	10022.5

t statistics in parentheses.

*p < 0.05, ^** p < 0.01, ^*** p < 0.001.

Table A2. The average value of predicted probabilities and observed fractions across labour supply alternatives

	Predicted	Observed
A. Women in Couple
Inactive	0.017755	0.020625
Unemployed	0.027174	0.022982
5 - 22	0.011039	0.00442
22 - 39	0.195358	0.2033
39 - 56	0.748674	0.748674
B. Men in Couple
Inactive	0.041128	0.043017
Unemployed	0.059956	0.047731
5 - 22	0.082874	0.070418
22 - 39	0.470726	0.493518
39 - 56	0.345315	0.345315
C. Single Men
Inactive	0.233291	0.231268
Unemployed	0.159889	0.162575
5 - 22	0.191616	0.188676
22 - 39	0.213798	0.218327
39 - 56	0.315418	0.316016
D. Single Women
Inactive	0.235618	0.235188
Unemployed	0.195866	0.199835
5 - 22	0.194552	0.19799
22 - 39	0.252569	0.254291
39 - 56	0.310901	0.305658

Table A3. Labour elasticities for All, it

		All			Couples			Singles
		Total	Extensive	Intensive	Total	Extensive	Intensive	Total	Extensive	Intensive
Education	Low level	0.137	0.109	0.028	0.106	0.083	0.024	0.174	0.142	0.033
	Middle level	0.119	0.093	0.026	0.090	0.065	0.024	0.156	0.127	0.029
	High level	0.088	0.058	0.029	0.073	0.040	0.033	0.107	0.083	0.024
Age	20-30	0.175	0.134	0.041	0.147	0.100	0.047	0.185	0.147	0.038
	31-40	0.112	0.085	0.027	0.097	0.071	0.027	0.131	0.103	0.028
	41-on	0.112	0.086	0.026	0.084	0.059	0.025	0.151	0.124	0.028
Child	Yes	0.132	0.102	0.031	0.101	0.070	0.031	0.148	0.117	0.030
	No	0.097	0.073	0.023	0.085	0.061	0.024	0.164	0.142	0.022
Migrant	Yes	0.118	0.091	0.026	0.089	0.063	0.026	0.156	0.128	0.027
	No	0.108	0.072	0.036	0.105	0.075	0.030	0.111	0.068	0.043
Income level	Low	0.166	0.131	0.036	0.132	0.103	0.030	0.208	0.165	0.043
	Middle	0.100	0.083	0.018	0.071	0.057	0.015	0.142	0.120	0.022
	High	0.050	0.019	0.031	0.045	-0.001	0.046	0.056	0.041	0.015
Total		0.117	0.089	0.027	0.090	0.064	0.026	0.150	0.121	0.029

Table A4. Labour elasticities, men

		All			Couples			Singles
		Total	Extensive	Intensive	Total	Extensive	Intensive	Total	Extensive	Intensive
Education	Low level	0.127	0.103	0.025	0.076	0.064	0.012	0.186	0.147	0.039
	Middle level	0.104	0.082	0.023	0.053	0.038	0.014	0.164	0.131	0.033
	High level	0.074	0.038	0.036	0.056	0.014	0.041	0.099	0.071	0.028
Age	20-30	0.175	0.130	0.045	0.085	0.050	0.034	0.191	0.144	0.047
	31-40	0.095	0.072	0.023	0.047	0.035	0.013	0.141	0.109	0.033
	41-on	0.101	0.076	0.025	0.064	0.043	0.021	0.158	0.127	0.031
Child	Yes	0.139	0.106	0.033	0.091	0.063	0.029	0.159	0.124	0.035
	No	0.051	0.036	0.015	0.046	0.031	0.015	0.147	0.135	0.012
Migrant	Yes	0.107	0.082	0.025	0.061	0.041	0.020	0.163	0.132	0.031
	No	0.096	0.057	0.039	0.058	0.041	0.018	0.129	0.072	0.058
Income level	Low	0.153	0.117	0.037	0.083	0.068	0.015	0.240	0.177	0.063
	Middle	0.081	0.079	0.002	0.030	0.040	-0.010	0.147	0.130	0.017
	High	0.066	0.013	0.054	0.084	-0.012	0.097	0.050	0.035	0.015
Total		0.106	0.080	0.026	0.061	0.041	0.020	0.159	0.125	0.034

Table A5. Labour elasticities, women

		All			Couples			Singles
		Total	Extensive	Intensive	Total	Extensive	Intensive	Total	Extensive	Intensive
Education	Low level	0.150	0.118	0.032	0.146	0.107	0.039	0.157	0.134	0.023
	Middle level	0.135	0.105	0.030	0.126	0.092	0.034	0.148	0.123	0.025
	High level	0.098	0.074	0.024	0.087	0.061	0.026	0.114	0.092	0.022
Age	20-30	0.174	0.139	0.035	0.172	0.120	0.052	0.176	0.153	0.022
	31-40	0.129	0.098	0.031	0.137	0.099	0.038	0.116	0.095	0.021
	41-on	0.123	0.096	0.027	0.107	0.078	0.029	0.144	0.120	0.024
Child	Yes	0.123	0.095	0.028	0.111	0.076	0.034	0.130	0.107	0.023
	No	0.134	0.103	0.030	0.124	0.092	0.032	0.167	0.144	0.024
Migrant	Yes	0.129	0.101	0.028	0.117	0.085	0.032	0.147	0.124	0.023
	No	0.120	0.085	0.034	0.144	0.103	0.041	0.092	0.065	0.027
Income level	Low	0.179	0.144	0.035	0.182	0.137	0.044	0.176	0.153	0.023
	Middle	0.122	0.087	0.035	0.112	0.073	0.039	0.137	0.108	0.028
	High	0.031	0.027	0.004	0.005	0.010	-0.006	0.065	0.049	0.016
Total		0.128	0.099	0.029	0.120	0.087	0.033	0.140	0.117	0.023

Table A6. Labour supply changes by gender and household type, employees

		Baseline, 2021	% Change after PIT1	% Change after PIT2
Hours of work
Men	In couple - with children	39.14	-0.31%	0.29%
	In couple - without children	37.63	-0.50%	0.63%
	Single - with children	35.67	-0.95%	1.88%
	Single - without children	34.68	-0.75%	1.59%
Women	In couple - with children	30.88	-1.05%	1.47%
	In couple - without children	31.61	-0.97%	1.64%
	Single - with children	31.71	-1.08%	2.51%
	Single - without children	33.16	-0.87%	1.84%
Participation
Men	In couple - with children	0.97	-0.29%	0.31%
	In couple - without children	0.94	-0.47%	0.61%
	Single - with children	0.90	-0.85%	1.46%
	Single - without children	0.88	-0.69%	1.31%
Women	In couple - with children	0.90	-0.70%	0.81%
	In couple - without children	0.92	-0.64%	0.87%
	Single - with children	0.86	-0.94%	1.63%
	Single - without children	0.89	-0.75%	1.23%
Unemployment
Men	In couple - with children	0.02	9.39%	-11.37%
	In couple - without children	0.04	6.75%	-11.39%
	Single - with children	0.05	7.74%	-14.01%
	Single - without children	0.06	3.95%	-10.22%
Women	In couple - with children	0.05	6.75%	-9.00%
	In couple - without children	0.05	6.52%	-10.69%
	Single - with children	0.07	6.01%	-12.03%
	Single - without children	0.06	4.70%	-10.57%
Inactivity
Men	In couple - with children	0.01	9.49%	-7.48%
	In couple - without children	0.02	7.95%	-6.44%
	Single - with children	0.05	7.07%	-11.48%
	Single - without children	0.06	6.35%	-9.05%
Women	In couple - with children	0.04	6.49%	-6.13%
	In couple - without children	0.04	7.42%	-7.97%
	Single - with children	0.07	5.90%	-8.71%
	Single - without children	0.06	6.99%	-8.74%

Note: Children are defined as son-daughter of the decision-making unit. They are not older than 18 years, or if older, in education.

Table A7. Labour supply changes by gender and household type, self-employed

		Baseline, 2021	% Change after PIT1	% Change after PIT2
Hours of work
Men	In couple - with children	41.87	-0.28%	0.25%
	In couple - without children	39.32	-0.44%	-0.10%
	Single - with children	37.09	-1.04%	2.63%
	Single - without children	37.33	-0.77%	1.38%
Women	In couple - with children	32.76	-0.85%	1.23%
	In couple - without children	32.73	-0.85%	1.17%
	Single - with children	34.19	-1.09%	2.02%
	Single - without children	34.78	-0.70%	1.21%
Participation
Men	In couple - with children	0.97	-0.25%	0.12%
	In couple - without children	0.94	-0.40%	-0.11%
	Single - with children	0.89	-0.95%	1.53%
	Single - without children	0.90	-0.71%	1.01%
Women	In couple - with children	0.93	-0.57%	0.52%
	In couple - without children	0.93	-0.55%	0.46%
	Single - with children	0.90	-0.81%	0.78%
	Single - without children	0.90	-0.66%	0.69%
Unemployment
Men	In couple - with children	0.01	8.37%	-3.83%
	In couple - without children	0.03	5.56%	3.09%
	Single - with children	0.05	8.28%	-12.55%
	Single - without children	0.04	6.21%	-8.81%
Women	In couple - with children	0.03	7.64%	-6.55%
	In couple - without children	0.03	7.20%	-5.24%
	Single - with children	0.04	6.75%	-6.52%
	Single - without children	0.04	5.85%	-6.19%
Inactivity
Men	In couple - with children	0.01	9.05%	-4.93%
	In couple - without children	0.03	6.31%	0.10%
	Single - with children	0.06	7.72%	-12.98%
	Single - without children	0.06	6.29%	-9.04%
Women	In couple - with children	0.04	7.99%	-7.61%
	In couple - without children	0.04	7.66%	-7.08%
	Single - with children	0.07	7.07%	-6.83%
	Single - without children	0.06	5.95%	-6.07%

Note: Children are defined as son-daughter of the decision-making unit. They are not older than 18 years, or if older, in education.

Table A8. Labour supply changes by gender and income quintiles

		Baseline, 2021	% Change after PIT1	% Change after PIT2
Hours of work
Men	I-II	34.42	-1.07%	1.47%
	III-IV	36.85	-0.98%	1.78%
	V-VI	37.40	-0.71%	1.47%
	VII-VIII	37.76	-0.43%	1.13%
	IX-X	38.75	0.05%	-0.97%
Women	I-II	28.18	-1.75%	2.12%
	III-IV	31.89	-1.78%	3.32%
	V-VI	33.08	-1.24%	2.58%
	VII-VIII	35.19	-0.57%	1.99%
	IX-X	34.74	0.34%	-0.45%
Participation
Men	I-II	0.87	-0.89%	1.11%
	III-IV	0.91	-0.84%	1.36%
	V-VI	0.93	-0.64%	1.16%
	VII-VIII	0.94	-0.44%	0.94%
	IX-X	0.94	-0.05%	-0.58%
Women	I-II	0.78	-1.29%	1.44%
	III-IV	0.86	-1.36%	2.14%
	V-VI	0.89	-0.99%	1.72%
	VII-VIII	0.93	-0.57%	1.30%
	IX-X	0.91	0.01%	-0.47%

Table A9. % Changes in employment, unemployment and inactivity rate after the PIT reforms

	Baseline	PIT1		PIT2
	Baseline	No Equilibrium (%)	With Equilibrium (%)	No Equilibrium (%)	With Equilibrium (%)
Employment	15854397	-0.66%	-0.62%	0.89%	0.85%
Inactivity	916796	6.49%	6.03%	-7.49%	-7.05%
Unemployment	762628	5.83%	5.54%	-9.50%	-9.29%
Wages			1.24%		-1.69%

*Definitions: Employment = Total number of people in employment, only labour supply endogenous sample, Inactivity = Total number of people in inactivity, only behavioural sample, Unemployment = Total number of people in unemployment, only behavioural sample, v = Parameter of percentage change in wages.