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Behavioural Microsimulation Modelling With the Melbourne Institute Tax and Transfer Simulator(MITTS) : Uses and Extensions

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  • John Creedy
  • Guyonne Kalb

Abstract

This paper describes microsimulation modelling in non-technical terms; and it 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. In addition, one worked-out example is presented to illustrate some of the features and typical outputs of MITTS. 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 or with female labour force participation.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 932.

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Length: 52 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:mlb:wpaper:932

Note: This paper has now been published in: Creedy, J. and Kalb, G. (2005) Behavioural Microsimulation Modelling for Tax Policy Analysis in Australia: Experience and Prospects, Australian Journal of Labour Economics, 8, no.1, pp. 73-110.
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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
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Fax: +61 3 8344 6899
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References

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  26. John Creedy & Guyonne Kalb & Hsein Kew, 2003. "Flattening the Effective Marginal Tax Rate Structure in Australia: Policy Simulations Using the Melbourne Institute Tax and Transfer Simulator," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(2), pages 156-172.
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