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Towards a multi-purpose framework for tax-benefit microsimulation: lessons from EUROMOD

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  • Herwig Immervoll

    () (Social Policy Division, OECD, 2 rue André Pascal, 75775 Paris Cedex 16, France)

  • Cathal O'Donoghue

    () (Rural Economy Research Centre, Teagasc, National University of Ireland, Galway)

Abstract

Tax-benefit models provide tools for policy analyses that should enable researchers to focus their attention on formulating policy scenarios and analysing their effects. From the users? and the developers? points of view, numerous characteristics and features are desirable to maximise the model?s usefulness. A model framework that offers generalised components essential for tax-benefit modelling while at the same time providing a large degree of flexibility in defining the specific parameters can be re-used for a multitude of modelling purposes. This paper discusses issues arising in the construction of such a general framework and illustrates possible approaches by reference to the the framework developed for construction of the EUROMOD tax-benefit model. EUROMOD is an integrated tax-benefit microsimulation model covering 15 (pre 2004) countries that are members of the European Union (Immervoll et al, 1999) as well as 4 of the New Member States. Implementing this many tax-benefit systems in one single consistent framework requires a robust yet flexible structure. The framework needs to reflect the basic structural characteristics of tax-benefit systems while leaving enough room for a diversity of particular instruments and rules. This paper outlines the general model framework adopted. We argue that, apart from its direct usefulness for EUROMOD, the framework has far wider applicability as a general approach to static tax-benefit microsimulation modelling.

Suggested Citation

  • Herwig Immervoll & Cathal O'Donoghue, 2009. "Towards a multi-purpose framework for tax-benefit microsimulation: lessons from EUROMOD," International Journal of Microsimulation, International Microsimulation Association, vol. 2(2), pages 43-54.
  • Handle: RePEc:ijm:journl:v:2:y:2009:i:2:p:43-54
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    1. Colombino Ugo & Locatelli Marilena & Narazani Edlira & O'Donoghue Cathal & Isilda Shima, 2008. "Behavioural and Welfare Effects of Basic Income Policies: An A Simulation for European Countries," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200806, University of Turin.
    2. Merz, Joachim, 1991. "Microsimulation -- A survey of principles, developments and applications," International Journal of Forecasting, Elsevier, vol. 7(1), pages 77-104, May.
    3. Redmond,Gerry & Sutherland,Holly & Wilson,Moira, 1998. "The Arithmetic of Tax and Social Security Reform," Cambridge Books, Cambridge University Press, number 9780521632249, March.
    4. Sutherland, Holly & Immervoll, Herwig & O'Donoghue, Cathal, 1999. "An introduction to EUROMOD," EUROMOD Working Papers EM0/99, EUROMOD at the Institute for Social and Economic Research.
    5. Holly Sutherland & David Piachaud, 2000. "How Effective is the British Government's Attempt to Reduce Child Poverty?," Papers inwopa00/6, Innocenti Working Papers.
    6. Colombino, Ugo & Locatelli, Marilena & Narazani, Edlira & O'Donoghue, Cathal & Shima, Isilda, 2008. "Behavioural and welfare effects of basic income policies: a simulation for European countries," EUROMOD Working Papers EM5/08, EUROMOD at the Institute for Social and Economic Research.
    7. Sutherland, H., 1995. "Static Microsimulation Models in Europe: A Survey," Cambridge Working Papers in Economics 9523, Faculty of Economics, University of Cambridge.
    8. O'Donoghue, Cathal & Albuquerque, J. & Baldini, Massimo & Bargain, Olivier & Bosi, P. & Levy, Horacio & Mantovani, D. & Matsaganis, Manos & Mercader-Prats, M. & Farinha, C. & Rodrigues, Farinha & Toso, 2002. "The impact of means tested assistance in Southern Europe," EUROMOD Working Papers EM6/01, EUROMOD at the Institute for Social and Economic Research.
    9. Callan, Tim & Sutherland, Holly, 1997. "The impact of comparable policies in European countries: Microsimulation approaches," European Economic Review, Elsevier, vol. 41(3-5), pages 627-633, April.
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