This strand of research is developing models of life-cycle consumption, labour supply and savings with fixed costs of labour force participation and other such fixed costs. Previous work has ignored these fixed costs. Models allowing for these fixed costs are necessary for counter-factual policy analysis. Further, these models allow us to obtain consistent estimates of structural parameters that cannot be obtained from simple regressions. Fixed costs give rise to discrete jumps in consumer decisions and so, our research combines techniques for analysing continuous choices such as savings with techniques for analysing discrete choices such as labour force participation or durable goods purchases. This combination of techniques allows us to model life-cycle choices in a more realistic way than previous research. We obtained co-funding for this project from the ESRC research grants scheme in 2003 and are continuing to develop computational techniques to deal with the complexities that fixed costs induce in life-cycle models.