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Behavioural Microsimulation Modelling for Tax Policy Analysis in Australia: Experience and Prospects

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Author Info
John Creedy () (Department of Economics, The University of Melbourne)
Guyonne Kalb () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

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Abstract

This paper describes microsimulation modelling in non-technical terms and explains what can be achieved with microsimulation modelling in general, and the Melbourne Institute Tax and Transfer Simulator (MITTS) in particular. The focus is on behavioural microsimulation modelling, which takes individuals’ labour supply responses into account when analysing tax and transfer reforms. Microsimulation models are built to replicate closely the considerable degree of heterogeneity observed in the population. Several examples of recent uses of MITTS are given and briefly described. Given the relatively recent development of behavioural microsimulation models, there are several opportunities for further extensions. For example, it would be valuable to allow for the demand side of labour, indicating whether new labour force participants are likely to find work or to allow for life-cycle dynamics, which are important to deal with population-ageing issues and female labour force participation.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2005n02.

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Length: 37 pages
Date of creation: Feb 2005
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Handle: RePEc:iae:iaewps:wp2005n02

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. John Creedy & Alan Duncan, 2001. "Aggregating labour supply and feedback effects in microsimulation," IFS Working Papers W01/24, Institute for Fiscal Studies. [Downloadable!]
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  3. Blundell, Richard William & Ham, John & Meghir, Costas, 1987. "Unemployment and Female Labour Supply," CEPR Discussion Papers 149, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. V. Joseph Hotz & John Karl Scholz, 2001. "The Earned Income Tax Credit," NBER Working Papers 8078, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. John Creedy & Guyonne Kalb & Rosanna Scutella, 2003. "Income Distribution in Discrete Hours Behavioural Microsimulation Models: An Illustration of the Labour Supply and Distributional Effects of Social Transfers," Melbourne Institute Working Paper Series wp2003n23, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  8. Guyonne Kalb, 2002. "Estimation of Labour Supply Models for Four Separate Groups in the Australian Population," Melbourne Institute Working Paper Series wp2002n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  11. Hansen, Gary D & Imrohoroglu, Ayse, 1992. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 118-42, February. [Downloadable!] (restricted)
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  19. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January. [Downloadable!] (restricted)
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  20. Lixin Cai & John Creedy & Guyonne Kalb, 2004. "Accounting for Population Ageing in Tax Microsimulation Modelling by Survey Reweighting," Melbourne Institute Working Paper Series wp2004n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  21. Creedy, John & van de Ven, Justin, 2001. "Decomposing Redistributive Effects of Taxes and Transfers in Australia: Annual and Lifetime Measures," Australian Economic Papers, Blackwell Publishing, vol. 40(2), pages 185-98, June. [Downloadable!] (restricted)
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  27. Ebert, Udo, 1997. "Social Welfare When Needs Differ: An Axiomatic Approach," Economica, London School of Economics and Political Science, vol. 64(254), pages 233-44, May. [Downloadable!] (restricted)
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  29. Guyonne Kalb & Hsein Kew & Rosanna Scutella, 2003. "Effects of the Australian New Tax System on Government Expenditure With and Without Behavioural Changes," Melbourne Institute Working Paper Series wp2003n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  30. John Creedy & Guyonne Kalb & Hsein Kew, 2004. "Confidence Intervals for Policy Reforms in Behavioural Tax Microsimulation Modelling," Melbourne Institute Working Paper Series wp2004n32, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sonsbeek, J.M. van & Gradus, R.H.J.M., 2005. "A microsimulation analysis of the 2006 regime change in the Dutch disability scheme," Serie Research Memoranda 0012, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
  2. Robert Breunig & Deborah A. Cobb-Clark & Xiaodong Gong, 2005. "Improving the Modeling of Couples' Labour Supply," IZA Discussion Papers 1773, Institute for the Study of Labor (IZA). [Downloadable!]
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