| Bemerkung: |
Changes in the tax and benefit system directly affect the distribution of disposable incomes. But how can we determine the distributional effect of tax reforms? How do we know, how tax reforms will affect different households? How should a tax reform look like to target the right income group?
To answer those questions, microsimulation models are used. The advantage of microsimulation models is that it allows for an ex-ante as well as an ex-post analysis of the impact of policy changes. In tax and benefit models, such as the STSM from the DIW or MSM-TTL from the Ifo Institute potential effects of tax or transfer reforms on the distribution of income as well a labor supply can be simulated. Therefore, microsimulation models are widely used in the analysis of social protection policies.
In this course, we will learn the basics in setting up a microsimulation model based on household data. The overall goal will be the creation of a policy instrument that effectively reduces income inequality. For that matter, we will first:
- Thoroughly analyze the dimensions and extent of income inequality and poverty of the given households in the data set.
- Based on this analyze, we will develop a proper policy response such as the introduction of a child benefit, unemployment benefit or other transfers that potentially reduce poverty and/or inequality.
- After agreeing on a potential solution, we will set up the microsimulation model, simulating the introduction of the chosen policy instrument. Afterwards, the impact of the instrument on poverty and income inequality will be analyzed.
The microsimulation model will be developed in Stata. Therefore, it is quite helpful for this course if you already know some basics about Stata. The teaching language will be english. |
