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Accounting for Population Ageing in Tax Microsimulation Modelling by Survey Reweighting

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  • Lixin Cai
  • John Creedy
  • Guyonne Kalb

Abstract

This paper investigates the use of sample reweighting in a behavioural tax microsimulation model, to examine the implications for government taxes and expenditure of population ageing in Australia. First, a calibration approach to sample reweighting is described, producing new weights which achieve specified population totals for selected variables, subject to the constraint that there are minimal adjustments to the weights. Second, the performance of the Australian Bureau of Statistics’ (ABS) weights provided with the 2001 Survey of Income and Housing Cost (SIHC) was examined and it was found that reweighting does not improve the simulation outcomes for the 2001 situation, so the original ABS weights were retained for 2001. Third, the implications of changes in the age distribution of the population were examined, based on population projections to 2050. A ‘pure’ change in the age distribution was examined by keeping the aggregate population size fixed and changing only the relative frequencies in different age-gender groups. Finally, the effects of a policy change to benefit taper rates in Australia were compared for 2001 and 2050 population weights. It is suggested that this type of exercise provides an insight into the implications of changes in the population on government income tax revenue and social security expenditure, indicating likely pressures for policy changes.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 935.

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Length: 29 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:mlb:wpaper:935

Note: This paper has now been published in: Cai, L., Creedy, J. and Kalb, G. (2006) Accounting for Population Ageing in Tax Microsimulation Modelling by Survey Reweighting, Australian Economic Papers, pp. 18-37.
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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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Web page: http://www.economics.unimelb.edu.au
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  1. John Creedy & Grant M. Scobie, 2005. "Population Ageing and Social Expenditure in New Zealand," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(1), pages 19-39, 03.
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Cited by:
  1. Vandyck, Toon, 2013. "Efficiency and Equity Aspects of Energy Taxation," EUROMOD Working Papers EM12/13, EUROMOD at the Institute for Social and Economic Research.
  2. John Creedy & Guyonne Kalb, 2005. "Behavioural Microsimulation Modelling for Tax Policy Analysis in Australia: Experience and Prospects," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(1), pages 73-110, March.
  3. Nicolas Hérault, 2010. "Sequential linking of Computable General Equilibrium and microsimulation models: a comparison of behavioural and reweighting techniques," International Journal of Microsimulation, Interational Microsimulation Association, vol. 3(1), pages 35-42.
  4. John Creedy & Guyonne Kalb, 2005. "Behavioural Microsimulation Modelling With the Melbourne Institute Tax and Transfer Simulator(MITTS) : Uses and Extensions," Department of Economics - Working Papers Series 932, The University of Melbourne.
  5. Maurizio Bussolo & Rafael E De Hoyos & Denis Medvedev, 2010. "Economic growth and income distribution: linking macro-economic models with household survey data at the global level," International Journal of Microsimulation, Interational Microsimulation Association, vol. 3(1), pages 92-103.
  6. Hielke Buddelmeyer & Nicolas Hérault & Guyonne Kalb & Mark van Zijll de Jong, 2009. "Linking a Dynamic CGE Model and a Microsimulation Model: Climate Change Mitigation Policies and Income Distribution in Australia," Melbourne Institute Working Paper Series wp2009n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  7. Hielke Buddelmeyer & Nicolas Hérault & Guyonne Kalb & Mark van Zijll de Jong, 2012. "Linking a Microsimulation Model to a Dynamic CGE Model: Climate Change Mitigation Policies and Income Distribution in Australia," International Journal of Microsimulation, Interational Microsimulation Association, vol. 5(2), pages 40-58.
  8. Nicolas Hérault, 2009. "Sequential Linking of Computable General Equilibrium and Microsimulation Models," Melbourne Institute Working Paper Series wp2009n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  9. Michal Myck & Mateusz Najsztub, 2014. "Data and Model Cross-Validation to Improve Accuracy of Microsimulation Results: Estimates for the Polish Household Budget Survey," Discussion Papers of DIW Berlin 1368, DIW Berlin, German Institute for Economic Research.

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