Unit 1.  Introduction to microsimulation modeling

Concept

History

Trends

Types of microsimulation modeling

Unit 2.  Microsimulation modeling for policy analysis:

Types of microsimulation model (for direct taxes, pension system, health care, social benefits, other   types)

National/international (EUROMOD) microsimulation models

Data:

• Survey data (i.e. Household budget Survey): advantages/disadvantages, grossing-up procedures

• Administrative databases: advantages/disadvantages, databases maintenance

• Weights

Behavior effects

Static vs Dynamic microsimulation models

Impact of demographic changes (population aging)

Microsimulation models as part of wider macroeconomic models

Unit 3. Microsimulation model for personal income tax (PIT) and social security contributions (SSC)

The unit of analysis: individual taxpayer/married couple/ household

Parameters of PIT/SCC:

• Tax base: definition, specifics (i.e. SSC ceilings) Tax deductions (allowances)

• Tax rates (schedule, flat rate)

• Dual tax system

Validation of PIT/SSC calculation (baseline scenario)

• Comparison with official data

• Validation for individual income sources separately and for the overall income

Assessing effects of policy changes:

• From macroeconomic perspective (overall amount of taxes)

• Results of microsimulation as input for macroeconomic models

• Changes in income inequality (Gini coefficient, I2)

• Redistribution of tax burden

By units of analysis (individual taxpayer/married couple/household)

By regions

By other criteria (age, gender, income decile)

Unit 4. Additional modules of microsimulation model

Pension system

• Elements of a pension system

• Social security contribution/government budged/private pension schemes

• PAYG and funded systems

• Pension pillars (1st, 2nd, 3rd)

• Mechanisms to calculate individual pension

• Pension system and demographic changes

Health care financing system

• Elements of health care financing

• Social security contribution/government budged/private and public insurance schemes

• Mechanisms to calculate individual health care contribution

• Health care and demographic changes

Social benefits

• Types of social benefits (child benefit, social assistance benefit, etc.)

• Eligibility criteria for social benefits

• Social benefits and demographic changes

Unit 5. Exercise in static microsimulation model for PIT and SSC

This section includes exercise in static microsimulation model for PIT and SSC. The model is based on artificial tax system and an artificial database of taxpayers. It covers a comprehensive set of tax parameters explained in Section 3 (above) such as different types of incomes (with different tax bases), different types of deductions as well as progressive tax schedule and flat tax option. The results include macroeconomic perspective (overall amount of SSC, PIT), changes in income inequality and distribution of tax burden at the level of individual taxpayers (grouped by different criteria). The model enables participants to change tax parameters, to estimate the consequences of changes and thus understanding the logic and functioning of this type of microsimulation model.

Unit 8. Exercise in static microsimulation model (additional modules) for pension system, health care financing and system of social benefits based on the microsimulation model for PIT and SSC.

In this section, the participants are guided to develop modules according to their interests, to change parameters of simulated policies and to estimate the consequences of those changes.