Parameterising the LINDA microsimulation model of benefit unit savings and labour supply

This paper describes how the parameters of the Lifetime INcome Distributional Analysis (LINDA) microsimulation model were defined to reflect survey data for the UK. LINDA is a dynamic programming model of savings and labour supply decisions that has been developed for use by UK policy makers. The model is adapted to project the circumstances of the evolving population cross-section forward through time. This feature of the model, which distinguishes it from much of the related literature, adapts the model for identifying all of the assumed preference parameters on data for a single population cross-section.