Using Microsimulation to Optimize an Income Transfer System Towards Poverty Reduction
In this study, a static microsimulation model SOMA is used to optimize Finland's tax-benefit legislation to alleviate poverty or at least to reduce it significantly. The method is a classical optimization method using a greed optimization strategy. This means an iterative process, where only one poverty diminishing parameter is changed by 10% from its earlier value at each iteration. Expenses are also optimized to reduce inequality as measured by the Gini-coefficient. Revenues and expenses are balanced at every iteration. Certain parameters of social assistance were found to be the most effective in reducing poverty. However by raising substantially the basic unemployment benefit, basic pensions, housing benefits and study grants - leaving social assistance untouched - poverty was reduced by under 50 percent. This means that social assistance is still required to reduce poverty further. Costs are most effectively financed by raising capital income tax.
Volume (Year): 13 (2010)
Issue (Month): 1 ()
|Contact details of provider:|| |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sutherland Holly, 2002. "Indicators for Social Inclusion in the European Union: the Impact of Policy Changes and the Use of Microsimulation Models," Politica economica, Società editrice il Mulino, issue 1, pages 117-120.
When requesting a correction, please mention this item's handle: RePEc:jas:jasssj:2008-2-3. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Flaminio Squazzoni)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.