[1] - Labour supply impact overall

[masterismail]

Usage

Example for labour_supply_impact/earnings/overall/relative

from policyengine import EconomicImpact


# # Define the reforms and microsimulation instances
yoyo = {
  "gov.hmrc.income_tax.rates.uk[0].rate": {
    "2024-01-01.2100-12-31": 0.55
  },
  "gov.simulation.labor_supply_responses.bounds.effective_wage_rate_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.bounds.income_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.income_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  },
  "gov.simulation.labor_supply_responses.substitution_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  }
}

impact = EconomicImpact(reform=yoyo,country="uk")



res1=  impact.calculate("labour_supply_impact/earnings/overall/relative/IncomeLSR")
res2 = impact.calculate("labour_supply_impact/earnings/overall/relative/SubstitutionLSR")
res3 = impact.calculate("labour_supply_impact/earnings/overall/relative/NetLSRChange")
print(res1)
print(res2)
print(res3)

Output

{'income': -1.74}
{'substitution': -2.18}
{'net_change': -3.92}

Example for labour_supply_impact/earnings/overall/absolute

from policyengine import EconomicImpact


# # Define the reforms and microsimulation instances
yoyo = {
  "gov.hmrc.income_tax.rates.uk[0].rate": {
    "2024-01-01.2100-12-31": 0.55
  },
  "gov.simulation.labor_supply_responses.bounds.effective_wage_rate_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.bounds.income_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.income_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  },
  "gov.simulation.labor_supply_responses.substitution_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  }
}

impact = EconomicImpact(reform=yoyo,country="uk")



res1=  impact.calculate("labour_supply_impact/earnings/overall/absolute/IncomeLSR")
res2= impact.calculate("labour_supply_impact/earnings/overall/absolute/SubstitutionLSR")
res3 = impact.calculate("labour_supply_impact/earnings/overall/absolute/NetLSRChange")
print(res1)
print(res2)
print(res3)

Output

{'income_lsr': -20.09}
{'substitution_lsr': -25.12}
{'net_change': -45.21}

Example for labour_supply_impact/earnings/by_decile/relative

from policyengine import EconomicImpact


# # Define the reforms and microsimulation instances
yoyo = {
  "gov.hmrc.income_tax.rates.uk[0].rate": {
    "2024-01-01.2100-12-31": 0.55
  },
  "gov.simulation.labor_supply_responses.bounds.effective_wage_rate_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.bounds.income_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.income_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  },
  "gov.simulation.labor_supply_responses.substitution_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  }
}

impact = EconomicImpact(reform=yoyo,country="uk")



re1 =  impact.calculate("labour_supply_impact/earnings/by_decile/relative/IncomeEffect")
re2 = impact.calculate("labour_supply_impact/earnings/by_decile/relative/SubstitutionEffect")
re3 = impact.calculate("labour_supply_impact/earnings/by_decile/relative/Total")
print(yo)
print(yoo)
print(yooo)

output

{'income': {1: -0.55, 2: -0.91, 3: -1.17, 4: -1.2, 5: -1.29, 6: -1.77, 7: -2.16, 8: -2.22, 9: -2.07, 10: -1.34, 11: -0.03}}
{'substitution': {1: -1.36, 2: -2.22, 3: -2.83, 4: -3.36, 5: -3.29, 6: -3.69, 7: -3.45, 8: -2.72, 9: -1.48, 10: -0.65, 11: 0.0}}
{'net_change': {1: -0.0191, 2: -0.0313, 3: -0.04, 4: -0.0457, 5: -0.0458, 6: -0.0546, 7: -0.0561, 8: -0.0493, 9: -0.0354, 10: -0.0199, 11: -0.0003}}

Example for labour_supply_impact/earnings/by_decile/absolute

from policyengine import EconomicImpact


# # Define the reforms and microsimulation instances
yoyo = {
  "gov.hmrc.income_tax.rates.uk[0].rate": {
    "2024-01-01.2100-12-31": 0.55
  },
  "gov.simulation.labor_supply_responses.bounds.effective_wage_rate_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.bounds.income_change": {
    "2024-01-01.2100-12-31": 1.1
  },
  "gov.simulation.labor_supply_responses.income_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  },
  "gov.simulation.labor_supply_responses.substitution_elasticity": {
    "2024-01-01.2100-12-31": 0.1
  }
}

impact = EconomicImpact(reform=yoyo,country="uk")



re1 =  impact.calculate("labour_supply_impact/earnings/by_decile/absolute/income_effect")
re2 = impact.calculate("labour_supply_impact/earnings/by_decile/absolute/substitution_effect")
re3 = impact.calculate("labour_supply_impact/earnings/by_decile/absolute/total")
print(re1)
print(re2)
print(re3)

output

{'decile_avg': {'income': {-1: 0.0, 1: -18.93514478022724, 2: -39.29859107484308, 3: -91.08124519162955, 4: -223.90703511377487, 5: -395.2897841682955, 6: -858.9841421726319, 7: -1294.696297621867, 8: -1629.7335136696418, 9: -2067.3501730780317, 10: -2026.5972444498755, 11: -732.5424194335938}}}
{'decile_avg': {'substitution': {-1: -12.138948359659084, 1: -46.7022874698809, 2: -95.56810382976973, 3: -220.22800767578707, 4: -626.9686012292634, 5: -1009.4598365869709, 6: -1787.6298434369562, 7: -2069.128367294302, 8: -1997.8199081152252, 9: -1476.7513827936828, 10: -980.7895390449535, 11: 0.0}}}
{'net_change': {1: -65.6374, 2: -134.8667, 3: -311.3093, 4: -850.8756, 5: -1404.7496, 6: -2646.614, 7: -3363.8247, 8: -3627.5534, 9: -3544.1016, 10: -3007.3868, 11: -732.5424, -1: -12.1389}}

[nikhilwoodruff]

Can we test, in the US

• Use CBO elasticities
• Flat tax on AGI of 10%

What's the projected labour supply impact?

If less than 1% difference, I think we can move forward.

If bigger, let's keep looking to try and figure out why

Edit: running into memory errors here! So let's stick to the UK impacts.