ABSTRACT
There is a long tradition of microsimulation models being applied to labour market issues but most of them concentrate on supply-side aspects– the incidence of taxes or social transfers on households' decisions to enter the labour market and/or their decisions to supply a larger or smaller number of hours. The obvious advantage of microsimulation is to allow the description of targeted policies at a very detailed level. In France, the most important of these demand-side policies over the last 15 years has been the reduction of employer's contributions on low wages, the idea being to boost labour demand through the reduction of labour costs. The objective is to simultaneously simulate labour-supply by individuals and labour demand by firms in a dynamic framework. Although still a prototype, the model is already able to provide orders of magnitudes for the impact of such shocks or changes that make sense.
