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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

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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. 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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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
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Handle: RePEc:mlb:wpaper:932

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  6. 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!]
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  11. John Creedy & Rosanna Scutella, 2003. "The Role of the Unit of Analysis in Tax Policy Reform Evaluations," Melbourne Institute Working Paper Series wp2003n28, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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  20. 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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  22. 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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  23. 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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  33. 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!]
  34. 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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  35. Callan, Tim, 2000. "Taxes, Transfers and Labour Market Responses: What can Microsimulation tell us?," Research Series, Economic and Social Research Institute (ESRI), number PRS36.
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