The sensitivity of poverty rates to macro-level changes in the European Union

Immervoll, Herwig; Levy, Horácio; Lietz, Christine; Mantovani, Daniela; Sutherland, Holly

doi:10.1093/cje/bei054

“…10 See Immvervoll et al (2006), Bargain et al (2012) and Dolls et al (2012) for further applications of the reweighting approach. Similar imputations from the LFS to EUROMOD input data have been conducted by Navicke et al (2014) and Salgado et al (2014).…”

mentioning

confidence: 99%

An Unemployment Insurance Scheme for the Euro Area? A Comparison of Different Alternatives Using Micro Data

Dolls

¹

,

Fuest

²

,

Neumann

³

et al. 2014

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This is the first paper that assesses the importance of different stabilization channels of an unemployment insurance system for the euro area (EA). We provide insights on the potential added value of common unemployment insurance (UI) as a fiscal risk sharing device which crucially hinges on its ability to provide interregional smoothing. Running counterfactual simulations based on micro data for the period 2000-13, we found that 10 percent of the income fluctuations due to transitions into and out of un-employment would have been cushioned through inter-regional smoothing at EA-level. Smoothing gains are unevenly distributed across countries, ranging from -5 percent in Malta to 22 percent in Latvia. Our results suggest that the inter-regional smoothing potential is as important as intertemporal smoothing through debt. We found that four member states would have been either a permanent net contributor or net recipient. Contingent benefits could limit the degree of cross-country redistribution, but might reduce desired insurance effects. We also study heterogeneous effects within countries and discuss moral hazard issues at the level of individuals, the administration and economic policy.JEL Codes: F55, H23, J65

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“…In our empirical analysis, we follow the approach taken by Immvervoll et al (2006), Bargain et al (2012) and Dolls et al (2012) and employ reweighting techniques to simulate a sample of repeated cross-sections for each EA member state over the period 2000-13. We impute various labor force characteristics from the LFS micro data based on 18 age-gender-education strata.…”

Section: A2 Reweighting Procedures For Modeling (Un)employment Changesmentioning

confidence: 99%

An unemployment insurance scheme for the euro area? A comparison of different alternatives using microdata

Dolls

¹

,

Fuest

²

,

Neumann

³

et al. 2017

Int Tax Public Finance

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This is the first paper that assesses the importance of different stabilization channels of an unemployment insurance system for the euro area (EA). We provide insights on the potential added value of common unemployment insurance (UI) as a fiscal risk sharing device which crucially hinges on its ability to provide interregional smoothing. Running counterfactual simulations based on micro data for the period 2000-13, we found that 10 percent of the income fluctuations due to transitions into and out of un-employment would have been cushioned through inter-regional smoothing at EA-level. Smoothing gains are unevenly distributed across countries, ranging from -5 percent in Malta to 22 percent in Latvia. Our results suggest that the inter-regional smoothing potential is as important as intertemporal smoothing through debt. We found that four member states would have been either a permanent net contributor or net recipient. Contingent benefits could limit the degree of cross-country redistribution, but might reduce desired insurance effects. We also study heterogeneous effects within countries and discuss moral hazard issues at the level of individuals, the administration and economic policy.JEL Codes: F55, H23, J65

show abstract

“…For example, to model an increase in unemployment rate (Immervoll et al, 2006b), the survey weights of households containing unemployed people at the time the survey was collected must be increased and the weights of other similar households reduced, in order to keep demographic characteristics and household structures constant in other relevant dimensions. Following this approach, Dolls et al (2012) simulate a hypothetical unemployment shock in 19 European countries and the US in order to analyze the effectiveness of the tax and transfer systems to act as an automatic stabilizer in an economic crisis.…”

Section: Modelling Change In Labour Market Statusmentioning

confidence: 99%

Microsimulation and Policy Analysis

Figari

¹

,

Paulus

²

,

Sutherland

³

2015

Handbook of Income Distribution

Self Cite

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ISER Working Paper Series www.iser.essex.ac.uk Microsimulation and Policy AnalysisNon-technical summary This paper is prepared as a chapter forthcoming in the Handbook of Income Distribution, Volume 2 (edited by A. B. Atkinson and F. Bourguignon, Elsevier-North Holland). Microsimulation methods are increasingly used to study the effects of policies on the income distribution contributing both to policy debates and academic literature. In general terms, microsimulation refers to modelling changes in the state or behaviour of micro-level units. We provide an overview of approaches that address questions related to the impact of taxbenefit policies on household income distribution. We first discuss how microsimulation modelling contributes to the analysis of the income distribution more broadly, pointing out that it can enrich survey and administrative data by checking its consistency, adding further details and enhancing analytical flexibility. In addition, it provides the basis for calculating indicators that cannot otherwise be estimated directly from micro-data such as measures of work incentives, net support for children and automatic stabilisers embedded in tax-benefit systems. We then focus more specifically on the role of microsimulation in policy evaluation. Taxbenefit models can provide information on household disposable income and its components under various policy scenarios and as such constitute a unique tool for ex ante policy analysis, though equally can be used for ex post analysis. We review the formal framework underlying such microsimulation-based decomposition analysis of income distribution and suggest a broader perspective to accommodate a wider range of applications. Our main emphasis is on static modelling methods, though we also consider extensions accounting for behavioural reactions and links with macroeconomic models. As microsimulation models are often concerned with current and future policies, we discuss various approaches to predict the income distribution given that data providing information on the current situation becomes available with a time lag, distinguishing between nowcasting and forecasting. We emphasise the role of comparative analysis as cross-country differences in tax-benefit systems and population structures provide a basis to assess the robustness of results and generalise conclusions. We provide empirical illustrations drawing mainly on analysis using the EU-wide tax-benefit model EUROMOD. Covering 27 countries and made generally accessible this is now one of the most widely used models. There are many remaining challenges to providing estimates of the effects of policy and policy changes that can be used with confidence within policy analysis and we consider three major issues: reconciling the simulated income distribution and that measured using the original micro-data; accounting for benefit non take-up and tax non-compliance, as well as validating and assessing the statistical reliability of microsimulation estimates. While our main focus is on the distributio...

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The sensitivity of poverty rates to macro-level changes in the European Union

Cited by 46 publications

References 5 publications

An Unemployment Insurance Scheme for the Euro Area? A Comparison of Different Alternatives Using Micro Data

An Unemployment Insurance Scheme for the Euro Area? A Comparison of Different Alternatives Using Micro Data

An unemployment insurance scheme for the euro area? A comparison of different alternatives using microdata

Microsimulation and Policy Analysis

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