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Imputation of gross amounts from net incomes in household surveys: an application using EUROMOD

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  • Immervoll, Herwig
  • O'Donoghue, Cathal

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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Suggested Citation

  • Immervoll, Herwig & O'Donoghue, Cathal, 2001. "Imputation of gross amounts from net incomes in household surveys: an application using EUROMOD," EUROMOD Working Papers EM1/01, EUROMOD at the Institute for Social and Economic Research.
  • Handle: RePEc:ese:emodwp:em1-01
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    File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em1-01.pdf
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    References listed on IDEAS

    as
    1. Sutherland, Holly, 2001. "EUROMOD: an integrated European benefit-tax model: final report," EUROMOD Working Papers EM9/01, EUROMOD at the Institute for Social and Economic Research.
    2. 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.
    3. 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.
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    Citations

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    Cited by:

    1. Immervoll, Herwig & O'Donoghue, Cathal, 2001. "Towards a multi purpose framework for tax benefit microsimulation," EUROMOD Working Papers EM2/01, EUROMOD at the Institute for Social and Economic Research.
    2. Verbist, Gerlinde, 2004. "Redistributive effect and progressivity of taxes: an international comparison across the EU using EUROMOD," EUROMOD Working Papers EM5/04, EUROMOD at the Institute for Social and Economic Research.
    3. Feres, Patricio & Immervoll, Herwig & Lietz, Christine & Levy, Horacio & Mantovani, Daniela & Sutherland, Holly, 2002. "Indicators for social inclusion in the European Union: how responsive are they to macro-level changes?," EUROMOD Working Papers EM3/02, EUROMOD at the Institute for Social and Economic Research.
    4. Morini, Matteo & Pellegrino, Simone, 2018. "Personal income tax reforms: A genetic algorithm approach," European Journal of Operational Research, Elsevier, vol. 264(3), pages 994-1004.
    5. Andrea Albarea & Michele Bernasconi & Cinzia Di Novi & Anna Marenzi & Dino Rizzi & Francesca Zantomio, 2015. "Accounting for Tax Evasion Profiles and Tax Expenditures in Microsimulation Modelling. The BETAMOD Model for Personal Income Taxes in Italy," International Journal of Microsimulation, International Microsimulation Association, vol. 8(3), pages 99-136.
    6. 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.
    7. Verbist, Gerlinde, 2005. "Replacement incomes and taxes: a distributional analysis for the EU-15 countries," EUROMOD Working Papers EM2/05, EUROMOD at the Institute for Social and Economic Research.
    8. Panos Tsakloglou & Daniela Mantovani & Fotis Papadopoulos & Holly Sutherland, "undated". "Pension Incomes in the European Union: Policy Reform Strategies in Comparative Perspective," EcoMod2006 272100095, EcoMod.
    9. Nora Lustig, 2015. "Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa," Commitment to Equity (CEQ) Working Paper Series 1331, Tulane University, Department of Economics.
    10. Lustig Nora, 2016. "Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa," Journal of Globalization and Development, De Gruyter, vol. 7(1), pages 17-60, June.
    11. repec:ijm:journl:v10:y:2017:i:1:p:5-38 is not listed on IDEAS
    12. Sutherland, Holly, 2001. "EUROMOD: an integrated European benefit-tax model: final report," EUROMOD Working Papers EM9/01, EUROMOD at the Institute for Social and Economic Research.
    13. Decoster, André & Vandelannoote, Dieter & Vanheukelom, Toon & Verbist, Gerlinde, 2014. "Gross incomes in the Belgian SILC dataset: an analysis by means of EUROMOD," EUROMOD Working Papers EM16/14, EUROMOD at the Institute for Social and Economic Research.
    14. Nora Lustig, 2016. "Fiscal policy, inequality and the poor in the developing world," Working Papers 418, ECINEQ, Society for the Study of Economic Inequality.
    15. Mantovani, Daniela & Sutherland, Holly, 2003. "Social indicators and other income statistics using the EUROMOD baseline: a comparison with Eurostat and National Statistics," EUROMOD Working Papers EM1/03, EUROMOD at the Institute for Social and Economic Research.
    16. Fernando Di Nicola & Giorgio Mongelli & Simone Pellegrino, 2015. "The static microsimulation model of the Italian Department of Finance: Structure and first results regarding income and housing taxation," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2015(2), pages 125-157.
    17. Popova, Daria, 2012. "Constructing the tax-benefit micro simulation Model For Russia – RUSMOD," EUROMOD Working Papers EM7/12, EUROMOD at the Institute for Social and Economic Research.
    18. Immervoll, Herwig, 2002. "The distribution of average and marginal effective tax rates in European Union Member States," EUROMOD Working Papers EM2/02, EUROMOD at the Institute for Social and Economic Research.
    19. Lietz, Christine & Mantovani, Daniela, 2006. "Lessons from building and using EUROMOD," EUROMOD Working Papers EM5/06, EUROMOD at the Institute for Social and Economic Research.
    20. Immervoll, Herwig, 2004. "Average and marginal effective tax rates facing workers in the EU: a micro-level analysis of levels, distributions and driving factors (revised version of EM2/02)," EUROMOD Working Papers EM6/04, EUROMOD at the Institute for Social and Economic Research.
    21. Dieter Vandelannoote & André Decoster & Toon Vanheukelom & Gerlinde Verbist, 2016. "Evaluating The Quality Of Gross Incomes In SILC: Compare Them With Fiscal Data And Re-calibrate Them Using EUROMOD," International Journal of Microsimulation, International Microsimulation Association, vol. 9(3), pages 5-34.

    More about this item

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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