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Analysis of the Changes in the Hungarian Tax System and Social Transfers between 2010 and 2014 Using a Behavioural Microsimulation Model

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  • Gergely Baksay

    (Hungarian National Bank)

  • Balázs Csomós

    (Hungarian National Bank)

Abstract

Using an updated microsimulation model developed earlier in the Hungarian National Bank, we estimate the macroeconomic, budgetary and labour market effects of government measures relating to taxes, social contributions, social transfers and gross wages since 2010. Compared to other studies, we take into account a more broad scope of measures, e.g. measures affecting gross wages and total labour cost directly. According to our estimations, the increase of the minimum wage and the so-called expected wage have fully compensated the low-income households of 2.3 million people already in the short-run for the loss of net income stemming from personal income tax and social contribution changes (especially for the abolition of tax credit).Taking into account social transfer reforms, the long-term macroeconomic effect of the measures is favourable: the level of employment may increase by approximately 2 percent, steady-state GDP level may go up by 1.5–2 and public deficit may decrease in the long run due to the government measures.

Suggested Citation

  • Gergely Baksay & Balázs Csomós, 2015. "Analysis of the Changes in the Hungarian Tax System and Social Transfers between 2010 and 2014 Using a Behavioural Microsimulation Model," Society and Economy, Akadémiai Kiadó, Hungary, vol. 37(supplemen), pages 29-64, December.
    • Handle: RePEc:aka:soceco:v:37:y:2015:i:supplement:p:29-64
    Note: The authors express their thanks to Péter Benczúr, Gábor Kátay, Gábor Kiss, Benedek Nobilis and András Svraka. The authors are responsible for every error that remained in the study.
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    References listed on IDEAS

    as
    1. Péter Benczúr & Gábor Kátay & Áron Kiss & Balázs Reizer & Mihály Szoboszlai, 2011. "Analysis of changes in the tax and transfer system with a behavioural microsimulation model," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 6(3), pages 15-27, October.
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    5. Benczúr, P. & Kátay, G. & Kiss, A. & Rácz , O., 2014. "Income Taxation, Transfers and Labour Supply at the Extensive Margin," Working papers 487, Banque de France.
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    More about this item

    Keywords

    behavioural microsimulation; linked micro macro model; tax system; transfers;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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