New Pathways in Microsimulation

344 Pages·2014·3.937 MB·English

by  Gijs Dekkers, Marcia Keegan, Cathal O’donoghue

New Pathways iN
MicrosiMulatioN
New Pathways in Microsimulation is an extremely useful reference for those
involved in the design and the evaluation of tax-benefit systems. Beyond
methodological advances, it contains valuable examples from different policy
domains, for example from the very timely field of pension reform in light of
demographic and budgetary pressures. The authors demonstrate the substantial
added value of microsimulations over purely aggregate or representative agent
models.
alain Jousten, university of liège, Belgium and Maastricht university, holland
This volume illustrates the powerful approach of microsimulation in policy
evaluation and design. There is a broad review of current applications including the
effectiveness of tax-benefit policy, the analysis of poverty, health status, population
ageing and the spatial effects of VAT-increases on household expenditures. Those
interested in pension issues will for instance benefit from an analysis of the impact
of the financial crisis on old-age poverty in Sweden using a model, which allows an
interaction between the pension system, the labour market and an endogenous tax
policy. Also recommended is a chapter on a stylized model of the pension system
in Belgium, which brings out a number of basic properties of the system. However,
a comparison demonstrates the advantages of a fully developed microsimulation
model. Model builders will for instance enjoy contemplating how far the ideas
of estimating block recursive models, and validating models by backwards
simulation of a historical period will take us. This book is highly recommended to
policy analysts, model builders and readers with a general interest in economics
and social science.
anders Klevmarken, Professor emeritus, uppsala university, Finland
This book is dedicated to the memory of Reinhold Hatzinger and
Thomas Lindh; contributors to this book who never saw it being published.
New Pathways in
Microsimulation
Edited by
GiJs DeKKers
Federal Planning Bureau and KU Leuven, Belgium and
CEPS/INSTEAD, Luxembourg
Marcia KeeGaN
University of Canberra, Australia
cathal o’DoNoGhue
The Irish Agriculture and Food Development Authority, Ireland
© Gijs Dekkers, Marcia Keegan, cathal o’Donoghue and the contributors 2014
all rights reserved. No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise without the prior permission of the publisher.
Gijs Dekkers, Marcia Keegan and cathal o’Donoghue have asserted their right under the
Copyright, Designs and Patents Act, 1988, to be identified as the editors of this work.
Published by
ashgate Publishing limited ashgate Publishing company
wey court east 110 cherry street
union road suite 3-1
Farnham Burlington, Vt 05401-3818
surrey, Gu9 7Pt usa
england
www.ashgate.com
British Library Cataloguing in Publication Data
a catalogue record for this book is available from the British library
The Library of Congress has cataloged the printed edition as follows:
Dekkers, Gijs.
New pathways in microsimulation / by Gijs Dekkers, Marcia Keegan and cathal
o’Donoghue.
pages cm
includes bibliographical references and index.
isBN 978-1-4094-6931-5 (hardback)—isBN 978-1-4094-6932-2 (ebook)—isBN
978-1-4094-6933-9 (epub) 1. social sciences—simulation methods. 2. economics—
simulation methods. 3. econometric models. i. title.
h61.25.D45 2014
300.1’1—dc23
2013025917
isBN 9781409469315 (hbk)
isBN 9781409469322 (ebk – PDF)
isBN 9781409469339 (ebk – ePuB)
V
Contents
List of Figures vii
List of Tables xi
Editors’ Biographies xiii
List of Contributors xv
1 Introduction 1
Gijs Dekkers, Cathal O’Donoghue and Marcia Keegan
2 Estimating the Small Area Effects of Austerity Measures in the UK 11
Ben Anderson, Paola De Agostini and Tony Lawson
3 Microsimulation Estimates of the Inequality Impact of the
Economic Crisis in Ireland 29
Cathal O’Donoghue, Jason Loughrey and Karyn Morrissey
4 Simulating the Need for Health- and Elderly Care in Sweden –
A Model Description of SESIM-LEV 41
Lisa Brouwers, Lina Maria Ellegård, Nils Janlöv,
Pontus Johansson, Karin Mossler and Anders Ekholm
5 An Australian Disease and Long-term Care Microsimulation Model 61
Richard Cumpston
6 Projection of the Supply of Nurses in France: A Microsimulation
Model 71
Muriel Barlet and Marie Cavillon
7 Gender Aspects of the Norwegian Pension System 93
Dennis Fredriksen and Nils Martin Stølen
8 The Redistributive Features of the Italian Pension System: The
Importance of Being Neutral 109
Roberto Leombruni and Michele Mosca
9 Simulating Policy Alternatives for Public Pensions in Japan 129
Seiichi Inagaki
vi New Pathways in Microsimulation
10 On the Construction of Early Warning Indicators of Old-Age
Poverty: The Index-Building versus the Microsimulation Approach 145
Georg P. Mueller
11 How Sensitive is Old-Age Poverty to Financial Crisis?
A Microsimulation Experiment for Sweden 161
Elisa Baroni, Thomas Lindh† and Gustav Öberg
12 Going Regional: The Effectiveness of Different Tax-benefit
Policies in Combating Child Poverty in Spain 183
Olga Cantó, Marta Adiego, Luis Ayala, Horacio Levy and
Milagros Paniagua
13 Combining EUROMOD and LIAM Tools for the Development of
Dynamic Cross-sectional Microsimulation Models: A Sneak Preview 203
Philippe Liégeois and Gijs Dekkers
14 An Overview of Binary Alignment Methods in Microsimulation 217
Jinjing Li and Cathal O’Donoghue
15 Simulating the Expenditures of Scottish Households: A Two-step
Microsimulation Approach to the Cairngorms National Park 233
Eveline van Leeuwen
16 Using Excel as a Front End to a Microsimulation Model on Energy
and Water Concession Pricing 249
Robert Tanton, Marcia Keegan and Quoc Ngu Vu
17 Modelling Sequences of Events with Chain Graph Models 259
Marcus Wurzer and Reinhold Hatzinger
18 Education in the Norwegian Microsimulation Model MOSART 271
Hege Marie Gjefsen
19 What are the Driving Forces behind Trends in Inequality among
Pensioners? Validating MIDAS Belgium Using a Stylized Model 287
Gijs Dekkers
20 An Investigation of the Sensitivity of a Dynamic Microsimulation
Model of Urban Neighbourhood Dynamics 305
Mark Birkin and Nicolas Malleson
Index 321
List of Figures
2.1 Difference between the car fuel baseline and 2.5 per cent VAT
scenario percentage change over 2006–16 at the LSOA level
for the East of England (spatial microsimulation, projected EFS,
projected Census 2006–16) 20
2.2 Difference between the car fuel baseline and 2.5 per cent VAT
scenario percentage change over 2006–16 by rural/urban
classification and IMD 2010 income deprivation decile 21
2.3 Summary of contributing models 23
3.1 Distribution of disposable income, simulated and actual 36
3.2 Distribution of disposable income, simulated and actual with
different benefit assumptions 37
3.3 Distribution of disposable income, simulated and actual with
different tax assumptions 38
4.1 Conceptual description of the flows in the SESIM-LEV model 42
4.2 Care consumption and the influence within or between years 47
4.3 Three scenarios describing different hypotheses regarding health
and ageing 53
4.4 Rejuvenation of men (top) and women (bottom) in the scenario
compression of morbidity 54
4.5 Four demographic developments. The three simulated scenarios
close together (from bottom): compression of morbidity, dynamic
equilibrium, and expansion of morbidity. The upper line shows the
Lancet scenario. Population in millions at y-axis. 55
4.6 Cancer scenarios; baseline, heaven and hell 55
4.7 Diabetes scenarios; baseline, heaven and hell 56
6.1 Schematic representation of the nursing supply microsimulation
model 75
6.2 Evolution of the number of and the density of working nurses
according to the baseline scenario 78
6.3 Density of independent nurses in 2006 and 2030, according to the
baseline scenario 83
6.4 Estimate of the number of salaried employee nurses working in
each region in 2030 84
viii New Pathways in Microsimulation
7.1 Connection between annual labour incomes and annual pension
benefits with old and new pension system 96
7.2 Structure of the dynamic microsimulation model MOSART 98
7.3 Share of old-age pensioners receiving minimum/guarantee pension
with new and old pension system. Per cent 101
7.4 Average old-age pension benefit for women with the new pension
system inclusive and exclusive entitlements for unpaid homecare.
Measured in per cent of total average wages 102
7.5 Horizontal distributional effects from accrual of entitlements 104
7.6 Distributional effects over the life cycle with the new and old
system for men and women born during the late 1990s 105
8.1 Career profiles at different wage levels 113
8.2 Career features with an impact on empirical redistribution 117
8.3 Actuarial premia versus lifetime income levels, workers retired
in 2004 122
8.4 The RS index of redistribution. Upper bound with bootstrapped CI,
and values computed on partially simulated data, years 1996–2004 124
9.1 Trends in percentage of the elderly by co-resident family type 135
9.2 Trends in distribution of equivalent income 137
9.3 Trends in percentage of the poor elderly in the population 139
10.1 A Lexis-diagram of the ageing of cohorts 150
10.2 The temporal evolution of the V_Index as an early warning of
old-age poverty 152
10.3 The process of early warning by microsimulation (right) as
compared with the index building approach (left) 153
10.4 Simulated early warning indicators for Germany 155
10.5 Simulated early warning indicators for the USA 156
10.6 Simulated early warning indicators for Sweden 156
11.1 Automatic balancing in the crisis scenario and the baseline scenario 172
11.2 Lifetime accumulation of notional pension account by cohort as a
proportion of yearly GDP per worker 174
11.3 Average income pension between 65 and 75 by cohort, as a fraction
of average GDP per worker 175
11.4 Elderly poverty rates (60 per cent) by cohort, age 65–80 176
11.5 Lifetime accumulation of notional pension account by cohort and
scenario as a proportion of yearly GDP per worker in the baseline
scenario 177
11.6 Average income pension by cohort and scenario as a proportion of
baseline GDP per worker 178
11.7 Labour supply by scenario for cohort 2040, age 55–65 179
List of Figures ix
11.8 Relative poverty among elderly 65–80, by cohort and scenario 180
11.9 Automatic balancing and timing of retirement 182
12.1 Child and adult (25–54) poverty headcounts – Spain and EU27:
2005–11 188
12.2 Child poverty headcounts for regions 2008 (national, regional
thresholds) 189
12.3 Overall coverage of child-related policies in Spain 194
12.4 Average expenditure per child in euro a year (benefits and tax
credits), by age groups 196
12.5 Average expenditure per child in euro a year (benefits and tax
credits), by income quintiles 197
12.6 Distribution of child age groups by income quintiles 197
13.1 Evolution of income distribution through time 213
15.1 Methodological framework 237
15.2 Share of total household expenditures on a selection of products
and services 239
15.3 Amount of money spent on different product groups and services
and the share spent in the Park 240
15.4 Deviations resulting from the matching procedure 244
15.5 Weights of the SMILE variables when using the matched
population or only the SMILE population 246
16.1 Opening view of IPART model 254
17.1 A simple undirected graph 260
17.2 A Block Recursive Model 262
17.3 R Data Editor used to define the structure of the model 264
17.4 Dependency structures of the fitted models for activities of daily
living (upper part) and monthly housing costs (lower part) 267
18.1 Educational transitions 274
18.2 Labour force by level of education. Share of labour force 282
18.3 Projections of the labour force with short tertiary education as the
highest. Share of labour force 283
18.4 Projections of the labour force with long tertiary education as the
highest. Share of labour force 284
19.1 Base model (Ψ = 1.25%) and a change of the indexation parameter 289
19.2 The impact of a decrease of Ψ from 1.8 to 1.25 in t = 20 on the
inequality of pension benefits 291
19.3 Kernel density of age 295