A Monte Carlo evaluation of discrete choice labour supply models

This paper is based on a Monte Carlo simulation in order to evaluate the properties of the discrete labour supply model. The data is generated by a continuous model and a discrete choice model is estimated assuming a translog utility function. The robustness of the results for different number of points in the discrete choice set, as well as for measurement errors in income and hours are compared. The discrete model produces similar results as the 'true' continuous model and apart from large measurement errors in hours these results are robust. © 2005 Taylor & Francis Group Ltd.