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The importance of choosing the data set for tax-benefit analysis

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  • Ceriani, Lidia
  • Fiorio, Carlo V.
  • Gigliarano, Chiara

Abstract

Given the increased availability of survey income data, in this paper we analyse the pros and cons of alternative data sets for static tax-benefit microsimulation in Italy. We focus on all possible alternatives, namely using (a) SHIW or (b) IT-SILC data using a consistent net-to-gross microsimulation model, or © IT-SILC data using the gross incomes provided since 2007. Our results suggest that IT-SILC improves in the regional representativeness of the Italian population and does not perform worse than SHIW as for most demographic characteristics, SHIW provides more information regarding building and real estate incomes. Gross income variables simulated by using the net-to-gross module included in the TABEITA microsimulation model and calibrating for tax evasion provide a very precise fit with external statistics, improving on results which could be obtained using the same TABEITA model on SHIW data. Simulated IT-SILC gross income data fit external aggregate data even better than gross income data provided in IT-SILC, which tend to largely overestimate self-employment income. Finally, we suggest to match IT-SILC with SHIW to include in the former the information on building and real estate incomes that are contained only in the latter. This allows us to reach a very satisfactory validation of the final data set.

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Paper provided by EUROMOD at the Institute for Social and Economic Research in its series EUROMOD Working Papers with number EM5/13.

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Date of creation: 28 Mar 2013
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Publication status: published
Handle: RePEc:ese:emodwp:em5-13

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  1. Gianni Betti & Gabriella Donatiello & Vijay Verma, 2011. "The siena microsimulation model (sm2) for net-gross conversion of eu-silc income variables," International Journal of Microsimulation, Interational Microsimulation Association, vol. 4(1), pages 35-53.
  2. Avram, Silvia & Figari, Francesco & Leventi, Chrysa & Levy, Horacio & Navicke, Jekaterina & Matsaganis, Manos & Militaru, Eva & Paulus, Alari & Rastrigina, Olga & Sutherland, Holly, 2013. "The distributional effects of fiscal consolidation in nine EU countries," EUROMOD Working Papers EM2/13, EUROMOD at the Institute for Social and Economic Research.
  3. Orsolya Lelkes, 2007. "Research Note - Tax-Benefit Microsimulation Models In Eastern Europe," International Journal of Microsimulation, Interational Microsimulation Association, vol. 1(1), pages 54-56.
  4. Stephen Pudney & Monica Hernandez & Ruth Hancock, 2002. "The Welfare Cost of Means-Testing: Pensioner Participation in Income Support," Discussion Papers in Economics, Department of Economics, University of Leicester 03/2, Department of Economics, University of Leicester.
  5. Giovanni D'Alessio & Ivan Faiella, 2002. "Non-response behaviour in the Bank of ItalyÂ’s Survey of Household Income and Wealth," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 462, Bank of Italy, Economic Research and International Relations Area.
  6. Emanuele Ciani & Donatella fresu, 2011. "From SHIW to IT-SILC: Construction and Representativeness of the New CAPP_DYN First-Year Population," Department of Economics, University of Modena and Reggio E., Faculty of Economics "Marco Biagi" 0662, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
  7. Sutherland, Holly & Figari, Francesco, 2013. "EUROMOD: The European Union Tax-Benefit Microsimulation Model," EUROMOD Working Papers EM8/13, EUROMOD at the Institute for Social and Economic Research.
  8. Carlo V Fiorio & Francesco D'Amuri, 2005. "Workers' Tax Evasion in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(2-3), pages 247-270, November.
  9. repec:ese:iserwp:2012-03 is not listed on IDEAS
  10. Fiona Coulter & Colin Lawson & Stephen Smith & Christopher Heady & Graham Stark, 1995. "Microsimulation modelling of personal taxation and social security benefits in the Czech Republic," IFS Working Papers, Institute for Fiscal Studies W95/08, Institute for Fiscal Studies.
  11. Monica Hernandez & Stephen Pudney & Ruth Hancock, 2006. "The Welfare Cost of Means Testing: Pensioner Participation in Income," Working Papers, The University of Sheffield, Department of Economics 2006004, The University of Sheffield, Department of Economics, revised Apr 2006.
  12. Pissarides, Christopher A. & Weber, Guglielmo, 1989. "An expenditure-based estimate of Britain's black economy," Journal of Public Economics, Elsevier, Elsevier, vol. 39(1), pages 17-32, June.
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Cited by:
  1. Sutherland, Holly & Figari, Francesco, 2013. "EUROMOD: The European Union Tax-Benefit Microsimulation Model," EUROMOD Working Papers EM8/13, EUROMOD at the Institute for Social and Economic Research.

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