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Behavioural Microsimulation Modelling for Tax Policy Analysis in Australia: Experience and Prospects

  • John Creedy

    ()

    (University of Melbourne)

  • Guyonne Kalb

    (University of Melbourne)

This paper describes microsimulation modelling in non-technical terms and 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. 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 and female labour force participation.

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Article provided by Bankwest Curtin Economics Centre (BCEC), Curtin Business School in its journal Australian Journal of Labour Economics.

Volume (Year): 8 (2005)
Issue (Month): 1 (March)
Pages: 73-110

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Handle: RePEc:ozl:journl:v:8:y:2005:i:1:p:73-110
Contact details of provider: Web page: http://business.curtin.edu.au/research/publications/journals/ajle/
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  35. 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.
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