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An assessment of PenSim2

Author

Listed:
  • Carl Emmerson

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Howard Reed

    (Institute for Fiscal Studies)

  • Andrew Shephard

    (Institute for Fiscal Studies and University of Pennsylvania)

Abstract

The Department for Work and Pensions (DWP)’s Pensim2 model is a dynamic microsimulation model. The principal purpose of this model is to estimate the future distribution of pensioner incomes, thus enabling analysis of the distributional effects of proposed changes to pension policy. This paper presents the results of an assessment of Pensim2 by researchers at the IFS. We start by looking at the overall structure of the model, and how it compares with other dynamic policy analysis models across the world. We make recommendations at this stage as to how the overall modelling strategy could be improved. We then go on to analyse the characteristics of most of the individual modules which make up Pensim2, examining the data used and the regression and predictions used in each step. The results from this examination are used to formulate a set of short and medium-term recommendations for developing and improving the model. Finally, we look at what might become possible for the model over a much longer time frame looking towards developing a ‘Pensim3’ model over the next decade or so.

Suggested Citation

  • Carl Emmerson & Howard Reed & Andrew Shephard, 2004. "An assessment of PenSim2," IFS Working Papers W04/21, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:04/21
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    File URL: http://www.ifs.org.uk/wps/wp0421.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Emanuele Ciani & Marcello Morciano, 2011. "Estimation and Simulation of Earnings in IT-SILC," Department of Economics 0660, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    2. Grech, Aaron George, 2013. "How best to measure pension adequacy," LSE Research Online Documents on Economics 51270, London School of Economics and Political Science, LSE Library.
    3. Jinjing Li & Cathal O'Donoghue, 2012. "Simulating Histories within Dynamic Microsimulation Models," International Journal of Microsimulation, International Microsimulation Association, vol. 5(1), pages 52-76.
    4. Jessica M. Mc Lay & Roy Lay-Yee & Barry J. Milne & Peter Davis, 2015. "Regression-Style Models for Parameter Estimation in Dynamic Microsimulation: An Empirical Performance Assessment," International Journal of Microsimulation, International Microsimulation Association, vol. 8(2), pages 83-127.
    5. Skarda, Ieva & Asaria, Miqdad & Cookson, Richard, 2022. "Evaluating childhood policy impacts on lifetime health, wellbeing and inequality: Lifecourse distributional economic evaluation," Social Science & Medicine, Elsevier, vol. 302(C).
    6. Justin van de Ven, 2016. "LINDA: A dynamic microsimulation model for analysing policy effects on the evolving population cross-section," National Institute of Economic and Social Research (NIESR) Discussion Papers 459, National Institute of Economic and Social Research.
    7. Blagica Petreski & Pavle Gacov, 2018. "Sustainability of the pension system in Macedonia: A comprehensive analysis and reform proposal with MK-PENS – dynamic microsimulation model," Finance Think Policy Studies 2018-02/14, Finance Think - Economic Research and Policy Institute.
    8. repec:cep:sticas:/172 is not listed on IDEAS
    9. Li, Jinjing & O'Donoghue, Cathal, 2012. "A methodological survey of dynamic microsimulation models," MERIT Working Papers 2012-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    pensions; microsimulation; policy analysis;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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