Microsimulation as an Instrument to Evaluate Economic and Social Programmes

Merz, Joachim (1993): Microsimulation as an Instrument to Evaluate Economic and Social Programmes.

Abstract

In recent years microsimulation models (MSMs) have been increasingly applied in quantitative analyses of the individual impacts of economic and social programme policies. The suitability of using microsimulation as an instrument to analyze main and side policy impacts at the individual level will be discussed in this paper by characterizing: the general approach and principles of the two general microsimulation approaches: static and dynamic (cross-section and lifecycle) microsimulation, the structure of MSMs with institutional regulations and behavioural response, panel data and behavioural change, deterministic and stochastic microsimulation, the 4M-strategy to combine microtheory, microdata, microestimation and microsimulation, and pinpointing applications and recent developments. To demonstrate the evaluation of economic and social programmes by microsimulation, two examples concerning a dynamic (cross-section and life-cycle) microsimulation of the German retirement pension reform and a combined static/dynamic microsimulation of the recent German tax reform with its behavioural impacts on formal and informal economic activities of private households are briefly described. Evaluating the evaluation of economic and social programmes with microsimulation models finally is followed by concluding remarks about some future developments.

• Item Type: MPRA Paper
• Language: English
• Keywords: microsimulation, evaluation of economic and social-political programms
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H22 - Incidence; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C81 - Methodology for Collecting, Estimating, and Organizing Microeconomic Data ; Data Access; C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C80 - General

References

Atkinson A.B. and H. Sutherland (1986) Taxation of husband and wife in the UK and changes in the tax benefit system, taxation and incentives and the distribution of income, Discussion Paper No.104, Suntory-Toyota International Center for Economics and Related Disciplines (ST/ICERD), London School of Economics and Political Sciences, London. Atkinson A.B. and H. Sutherland (1988a), "TAXMOD", in A.B. Atkinson and H. Sutherland (editors) (1988), Tax benefit models, London. Atkinson A.B. and H. Sutherland (editors) (1988), Tax benefit models, London. Bergmann B., G. Eliasson and G.H. Orcutt (editors) (1980), Microsimulation - Models, methods and applications, Industrial Institute for Economics and Social Research, Stockholm. Bradbury B. (editor) (1992), Tax-Benefit Models and Microsimulation Methods, Proceedings of a Workshop held on 1 June 12990 at the University of New South Wales, Social Policy Research Centre, The University of New South Wales, Kensington, Australia. Brunner J.K. and H.-G. Petersen (editors) (1990), Simulation Models in Tax and Transfer Policy, Frankfurt. Bungers D. and H. Quinke (1986), "A microsimulation model for the German Federal Training Assistance Act - Principles, problems and experiences", in G.H. Orcutt., J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 171-183. Caldwell S.B. (1983), "Modelling demographic-economic interaction: Micro, macro and linked micro-macro strategies", in Socio-Economic Planning Sciences, Vol.17, pp. 365- 372. Caldwell S.B. (1986), "Broadening policy models: Alternative strategies", in G.H. Orcutt., J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 59-77. Citro C.F. and E.A. Hanushek (editors) (1991a), Improving Information for Social Policy Decisions, The Uses of Microsimulation Modeling: Review and Recommendations, Vol. I, National Research Council, Washington. Citro C.F. and E.A. Hanushek (editors) (1991b), Improving Information for Social Policy Decisions, The Uses of Microsimulation Modeling: Technical Papers, Vol. II, National Research Council, Washington. Eliasson G. (1986), "The Swedish micro-to-macro model: Idea, design and application", in G.H. Orcutt., J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 299-328. Falkingham J. and C. Lessof (1992), "Playing God: or LIFEMOD - the construction of a dynamic microsimulation model", in R. Hancock and H. Sutherland. (editors) (1992), Microsimulation Models for Public Policy Analysis: New Frontiers, Suntory-Toyota International Centre for Economics and Related Disciplines, London School of Economics and Political Science, London, pp. 5-32. Galler H.P. and G. Wagner (1986), "The microsimulation model of the Sfb 3 for the analysis of economic and social policies", in G.H. Orcutt, J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 227-247. Galler H.P. (1980), "Zur Verknüpfung mikroanalytischer Simulationsmodelle mit ökonometrischen Kreislaufmodellen", in H. Schmidt and B. Schips (editors), Verknüpfung sozioökonomischer Modelle, Campus, Frankfurt/M., New York. Galler H.P. (1981), "On the evaluation of social security programs", in Bulletin of the International Statistical Institute, Vol.49, pp. 1031-1051. Gomulka J. (1992), "Grossing-up revisited", in R. Hancock and H. Sutherland (editors) (1992), Microsimulation Models for Public Policy Analysis: New Frontiers, Suntory- Toyota International Centre for Economics and Related Disciplines, London School of Economics and Political Science, London, pp. 121-132. Greenberger M., M. Crenson and B. Crissey (1976), Models in the policy process: Public decision making in the computer era, Russel Sage Foundation, New York. Grohmann H., W. Hain and W. Kiel (1981), "Das Gruppensimulationsmodell", in H.-J. Krupp, H.P. Galler, H. Grohmann, R. Hauser and G. Wagner (editors), Alternativen der Rentenreform '84, Campus, Frankfurt/M., New York. Hain W. and C. Helberger (1986), "Longitudinal microsimulation of life income", in G.H. Orcutt, J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 251-270. Hancock R. and H. Sutherland (editors) (1992), Microsimulation Models for Public Policy Analysis: New Frontiers, Suntory-Toyota International Centre for Economics and Related Disciplines, London School of Economics and Political Science, London. Hungarian Ministry of Industry (1987), Models for the development of the industry, Budapest. Ichimura S. and M. Ezaki (1985), Econometric models of astan link, Tokyo, New York. Krupp H.-J., H.P. Galler, H. Grohmann, R. Hauser and G. Wagner (editors) (1981), Alternativen der Rentenreform '84, Campus, Frankfurt/M., New York. Langer H.G., J. Martiensen and H. Quinke (editors) (1984), Simulationsexperimente mit ökonometrischen Makromodellen, München, Wien. McFadden D. (1985), "Econometric Analysis of Qualitative Response Models", in Griliches Z. and M. Intriligator (editors) (1985), Handbook of Econometrics, Volume II, Amsterdam/New York, pp. 1395-1457. Merz J. (1978), "Auswirkungen fiskalpolitischer Maßnahmen der Bundesregierung der Jahre (1972 bis 1976) auf die Einkommensverteilung", in H.J. Krupp and W. Glatzer (editors), Umverteilung im Sozialstaat - Empirische Einkommensanalysen für die Bundesrepublik, Campus, Frankfurt/M., New York, pp. 277-314. Merz J. (1983), The adjustment of microdata using the Kalman filtering procedure and optimal control theory, Sfb 3-Arbeitspapier No.122, Sonderforschungsbereich 3, Mikroanalytische Grundlagen der Gesellschaftspolitik, Frankfurt/M., Mannheim. Merz J. (1985), "Ein modifiziertes Newton-Verfahren zur Lösung des Hochrechnungsproblems nach dem Prinzip des minimalen Informationsverlustes", in Computing, 35, pp. 51-61. Merz J. (1986), "Structural adjustment in static and dynamic microsimulation models", in G.H. Orcutt, J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 423-446. Merz J. (1989), Markt- und nichtmarktmäßige Aktivitäten privater Haushalte - Theoretischer Ansatz, Repräsentative Mikrodaten, Mikroökonometrische Analyse und Mikrosimulation Wirtschafts- und Sozialpolitischer Maßnahmen für die Bundesrepublik Deutschland, Habilitationsschrift, Frankfurt. Merz J. (1990a), "The 1990 German tax reform - Microsimulation of time allocation effects in the formal and informal economy", in J.K. Brunner and H.G. Petersen (editors), Simulation models in tax and transfer policy, Campus, Frankfurt/M., New York. Merz J. (1990b), Microdata adjustment using the minimum information loss prinicple with a fast modified Newton-Raphson procedure, Sfb 3-Working paper No.315, Sonderforschungsbereich 3, Mikroanalytische Grundlagen der Gesellschaftspolitik, Frankfurt/M., Mannheim. Merz J. (1991), "Microsimulation - A Survey of Principles. Developments and Applications", in International Journal of Forecasting 7, pp. 77-104. Merz J. (1993), "Das Statische Sfb-3 Microsimulations Modell - Mainframe und PC Version", in R. Hauser., N. Ott und G. Wagner (editors), Mikroanalytische Grundlagen der Gesellschaftspolitik - Probleme und ausgewählte Lösungsansätze, Weinheim/New York. Merz J. und P. Buxmann (1990), MICSIM: Ein PC-Mikrosimulationsmodell für Forschung und Lehre realisiert mit C und dem relationalen Datenbanksystem ORACLE, Sfb 3- Arbeitspapier Nr.316, Sonderforschungsbereich 3, Mikroanalytische Grundlagen der Gesellschaftspolitik, Frankfurt/M., Mannheim. Morgan J. and G. Duncan (1986), "Experience with the Panel Study of Income Dynamics," in G.H. Orcutt, J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 349-365. Mot E.S. (1992), Survey of Microsimulation Models - Inventory and Recommendations, SEO, Tichting voor Economisch Onderzoek der Universiteit van Amsterdam, Amsterdam. Nelissen J.H.M. (1992), The Redistributive Impact of Social Security Schemes on Lifetome Labour Income, Tilburg University, Tilburg. Ökonomiministeriet (1991), Lovmodel - Overview of the Danish law model system, Copenhagen. Orcutt G. (1957) "A new type of socio-economic systems", in The Review of Economics and Statistics, Vol.58, pp. 773-797. Orcutt G., J. Merz and H. Quinke (editors) (1986), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam. Orcutt G., M. Greenberger, J. Korbel and A. Rivlin (1961), Microanalysis of socioeconomic systems: A simulation study, Harper and Row, New York. Orcutt G., S. Caldwell and R. Wertheimer II (1976), Policy exploration through microanalytic simulation, The Urban Institute, Washington, D.C. Paass G. (1986), "Statistical Match: Evaluation of Existing Procedures and Improvements by Using Additional Information", in G.H. Orcutt, J. Merz and H. Quinke (editors), Microanalytic simulation models to support social and financial policy, North Holland, Amsterdam, pp. 401-420. Pindyck R.S. and D.L. Rubinfeld (1986), Econometrics models and economic forecasts, Auckland, Tokyo. Rees A., (editor) (1977), The New Jersey income maintenance experiment, Vol.2: Laborsupply responses, New York. Schaaijk M.van, A. Verkade,. and R. Waaijers (1991), Mikropolis, internal note, Central Planning Office, The Hague. Spahn P.B., H.P. Galler, H. Kaiser, TH. Kassella and J. Merz (1992), Mikrosimulation in der Steuerpolitik, Heidelberg. Wagner G. (1983), Die Längsschnittversion 82.w des Sfb 3-Mikrosimulationssystems - Dokumentation und Diskussion der Modellierungsprobleme, Sfb 3-Arbeitspapier Nr.127, Sonderforschungsbereich 3, Mikroanalytische Grundlagen der Gesellschaftspolitik, Frankfurt/M., Mannheim. Wolfson M. (1990), "Income tax/transfer integration - Policy implications and analytical challenges", in J.K. Brunner and H.G. Petersen (editors), Simulation models in tax and transfer policy, Campus, Frankfurt/M., New York.