The Arithmetic of Tax and Social Security Reform
A User's Guide to Microsimulation Methods and Analysis

A comprehensive assessment of the theory and workings of the POLIMOD tax-benefit model.

Gerry Redmond (Author), Holly Sutherland (Author), Moira Wilson (Author)

9780521632249, Cambridge University Press

Hardback, published 1 October 1998

318 pages, 94 tables
22.9 x 15.2 x 1.9 cm, 0.6 kg

Tax-benefit models are powerful tools for the analysis of the impact of policy reform, in regular use around the world in government and research organisations. This study focuses on one particular model, POLIMOD, and performs three tasks. It provides an illustration of the type of analysis that can be performed, and demonstrates the sensitivity of results to some of the key assumptions that are made. It steps inside POLIMOD and documents some of the inner layers of data manipulation and model construction that drive its output. And it provides a detailed assessment of the reliability of those outputs based on a validation against external sources. The study offers those who use models like POLIMOD, or their outputs, an appreciation of the constraints and assumptions that shape the analysis they provide. And it provides those directly involved in the development of microsimulation models with a guide to methods.

Part I. Tax-Benefit Methods: Methods and Analysis: 1. Introduction
1.2 Prospects for further development
2. POLIMOD
2.1 Introduction
2.2 Policy options
2.3 Run options
2.4 Updating
2.5 Income measure
2.6 Incidence and behaviour assumptions
Appendix
2.1 Policy parameters
Appendix
2.2 Options for income-tax policy
Part II. Model Outputs and Modelling Assumptions: 3. The distributional effect of changes in UK policy since 1978
3.1 Introduction
3.2 Average taxes and benefits
3.3 Distributional effects
3.4 Gainers and losers
3.5 Conclusions.

Subject Areas: Microeconomics [KCC]