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

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  • Lidia CERIANI

    ()

  • Carlo V. FIORIO

    ()

  • Chiara GHIGLIARANO

    ()

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 (c) using the gross incomes provided in IT-SILC 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 procedure provided 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 harmonized 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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Bibliographic Info

Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2013-05.

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Date of creation: 11 Mar 2013
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Handle: RePEc:mil:wpdepa:2013-05

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Keywords: Tax-benefit microsimulation; Italy; TABEITA; SILC; SHIW;

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  1. repec:ese:emodwp:em2-13 is not listed on IDEAS
  2. Pissarides, Christopher A. & Weber, Guglielmo, 1989. "An expenditure-based estimate of Britain's black economy," Journal of Public Economics, Elsevier, vol. 39(1), pages 17-32, June.
  3. 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) 462, Bank of Italy, Economic Research and International Relations Area.
  4. Pudney, Stephen & Monica Hernandez & Ruth Hancock, 2003. "The Welfare Cost of Means-Testing: Pensioner Participation in Income Support," Royal Economic Society Annual Conference 2003 171, Royal Economic Society.
  5. repec:ese:iserwp:2012-03 is not listed on IDEAS
  6. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, Interational Microsimulation Association, vol. 1(6), pages 4-26.
  7. 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 W95/08, Institute for Fiscal Studies.
  8. 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.
  9. Emanuele Ciani & Donatella fresu, 2011. "From SHIW to IT-SILC: Construction and Representativeness of the New CAPP_DYN First-Year Population," Department of Economics 0662, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
  10. 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, vol. 64(2-3), pages 247-270, November.
  11. 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.
  12. Monica Hernandez & Stephen Pudney & Ruth Hancock, 2006. "The Welfare Cost of Means Testing: Pensioner Participation in Income," Working Papers 2006004, The University of Sheffield, Department of Economics, revised Apr 2006.
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Cited by:
  1. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, Interational Microsimulation Association, vol. 1(6), pages 4-26.

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