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Imputation of Gross Amounts from Net Incomes in Household Surveys. An Application using EUROMOD

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Author Info

  • Herwig Immervoll

    (University of Cambridge and European Centre for Social Welfare Policy and Research - Vienna)

  • Cathal O'Donoghue

    (University of Cambridge and National University of Ireland - Galway)

Abstract

Household micro-datasets often do not contain information on gross incomes. We present an algorithm which exploits the tax- and contribution rules built into tax-benefit models to convert net income information into gross amounts. Using EUROMOD, a multi-country taxbenefit model covering all fifteen countries of the European Union, net-to-gross conversions can be performed for a large number of countries utilising existing models of relevant fiscal rules. The algorithm takes into account all relevant complexities of tax- and contribution rules and can, thus, produce much more accurate results than statistical models which estimate netto- gross ratios using only a few explanatory variables. Among the features of the algorithm is the ability to distinguish between different individuals in the same household. Even if individuals’ incomes are taxed jointly, the algorithm is able to approximate separate net-togross factors for individuals in the same fiscal unit. This is possible since EUROMOD can accurately assign people to appropriate fiscal units. In addition, it is in certain cases possible to produce different net-to-gross ratios for different income components. We undertake a case study to illustrate the importance of deriving separate net-to-gross factors for different individuals within a household/fiscal unit and for different income sources of the same individual.

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File URL: http://128.118.178.162/eps/comp/papers/0302/0302001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Computational Economics with number 0302001.

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Date of creation: 07 Feb 2003
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Handle: RePEc:wpa:wuwpco:0302001

Note: Type of Document - ; figures: included. EUROMOD web-site:
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Web page: http://128.118.178.162

Related research

Keywords: Microsimulation; Imputation; Income; Net/Gross;

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  1. repec:ese:emodwp:em0-99 is not listed on IDEAS
  2. Julian McCrae, 1999. "The Development and Uses of Tax and Benefit Simulation Models," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 2(1), January.
  3. repec:ese:emodwp:em9-01 is not listed on IDEAS
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Cited by:
  1. repec:ese:emodwp:em5-04 is not listed on IDEAS
  2. repec:ese:emodwp:em6-04 is not listed on IDEAS
  3. repec:ese:emodwp:em2-02 is not listed on IDEAS
  4. Mantovani, Daniela & Papadopoulos, Fotis & Sutherland, Holly & Tsakloglou, Panos, 2005. "Pension Incomes in the European Union: Policy Reform Strategies in Comparative Perspective," IZA Discussion Papers 1537, Institute for the Study of Labor (IZA).
  5. Vaqar Ahmed & Cathal O'Donoghue, 2009. "Redistributive Effect of Personal Income Taxation in Pakistan," Working Papers 0143, National University of Ireland Galway, Department of Economics, revised 2009.
  6. repec:ese:emodwp:em2-01 is not listed on IDEAS
  7. repec:ese:emodwp:em7-12 is not listed on IDEAS
  8. Herwig Immervoll & Cathal O'Donoghue, 2003. "Towards A Multi-Purpose Framework For Tax-Benefit Microsimulation," Computational Economics 0302002, EconWPA.
  9. repec:ese:emodwp:em2-05 is not listed on IDEAS
  10. Herwig Immervoll, 2003. "The Distribution Of Average And Marginal Effective Tax Rates In European Union Member States," Public Economics 0302005, EconWPA.
  11. repec:ese:emodwp:em1-03 is not listed on IDEAS
  12. repec:ese:emodwp:em3-02 is not listed on IDEAS
  13. repec:ese:emodwp:em5-06 is not listed on IDEAS
  14. repec:ese:emodwp:em9-01 is not listed on IDEAS

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