Income taxes and benefits in the European Union (analyzes using the micro-simulation approach)
|Kod Erasmus / ISCED:||
|Nazwa przedmiotu:||Income taxes and benefits in the European Union (analyzes using the micro-simulation approach)|
|Jednostka:||Wydział Nauk Ekonomicznych|
Seminaria magisterskie dla II roku programów anglojęzycznych
|Punkty ECTS i inne:||
How is the distribution of household disposable income affected by changes in personal income tax and social security contributions ? How do such changes affect the financial incentives to work? Would it be more profitable for people to work if the tax and benefit system from one country were "transferred" to another? Are salaries in one country are more heavily taxed than in other countries? Are benefits for raising children in a given country are higher than in other countries?
The aim of the seminar is to teach participants how to use the European tax and benefit model EUROMOD, used among others by the European Commission to assess distributional effects at the household level. The EUROMOD model uses data from the EU-SILC survey and coded tax and benefit regulations to create a hypothetical income distribution for households, making it possible to compare different income policy scenarios.
There are various solutions concerning social insurance and taxation of income from work in the European Union countries. Social insurance contributions (ZUS), contributions for general health insurance (NFZ) and personal income tax (PIT) are used in Poland but other countries have their solutions. Benefit solutions also vary across the EU countries. In Poland it consists of family benefits, nursing benefits, housing allowance and social assistance benefits.
It is very complicated to identify beneficiaries of the tax and benefit system, i.e., persons whose disposable income is higher than the gross wage, as well as net payers. In such a case it is worth using a microsimulation model. This method help to find out how the relationship between "what I earn" (gross salary) and my disposable income changes with gross salary and the characteristics of the household (e.g. number of children and their age, number of people in the household, marital status).
The tax and benefit microsimulation model consists of three parts: a computer program containing coded tax and benefit rules, a model database created from a large and representative household survey, and documentation describing the regulatory system. The first tax and benefit microsimulation models were developed in the late 1980s and were used to analyze the effects of changes in tax and benefit regulations on inequality of household disposable income. Initially, simulations were used for analyses using static non-behavioral models to:
1. comparing tax and benefit solutions applied in different countries from the point of view of their impact on the variation of household disposable income and financial incentives to work,
2. analysis of consequences of introduced or planned tax and benefit changes on the distribution of disposable income of households and their fiscal costs
Currently, tax-benefit models are used in behavioral and dynamic models, too. In the seminar we will mainly use the static approach.
The tool proposed in the seminar is the European tax and benefit model EUROMOD used by the European Commission for distributional analysis. The EUROMOD model uses micro-data from the Survey of Living Conditions and Income (EU-SILC). On the seminar, participants will work with this data covering information from over 16,000 households. Participants will be encouraged to use the training materials prepared by the "Developers" of the model.
The first part of the seminar is devoted to getting familiar with the construction of the model, the documentation and the "modeldata set" (EU-SILC and regulations). The second part is based on practical exercises with hypothetical data sets (HHoT module). The third part is to run and describe the simulations. Due to the nature of the analysis it is acceptable (even advisable!!!) to prepare a joint project by two people.
Bourguignon, Francois, and Amedeo Spadaro. “Microsimulation as a Tool for Evaluating Redistribution Policies”. The Journal of Economic Inequality 4, no. 1 (April 2006) : 77-106.
Callan, Tim, and Holly Sutherland. “The Impact of Comparable Policies in European Countries : Microsimulation Approaches”. European Economic Review, 41, no. 3-5 (April 1997) : 627-33.
Figari F., Paulus A., Sutherland H., Microsimulation and Policy Analysis, in A. B. Atkinson and F. Bourguignon (ed.), the Handbook of Income Distribution, Volume 2
Morawski L., Domitrz A., Subjective approach to poverty in Poland – implications for social policy, Statistics in Transition new series, September, Vol. 18, No. 3, pp. 271–290, DOI 10. 21307, 2017
Morawski L., Semeniuk A., Polityka podatkowo-świadczeniowa w Polsce w latach 2006-2010 a wartości wskaźników zróżnicowania dochodów - analiza dekompozycyjna z wykorzystaniem modelu mikrosymulacyjnego, Gospodarka Narodowa, 3, 2013 (na podstawie pracy magisterskiej)
Myck M., Domitrz A., Morawski L., Semeniuk A., Financial incentives to work in the context of a complex reform package and growing wages: the Polish experience 2005–2011, Baltic Journal of Economics, vol.15, bo.2, 2015,
Orcutt, Guy H. “A New Type of Socio-Economic System”. The Review of Economics and Statistics 39, no. 2 (1957) : 116-23.
Orcutt, Guy H. “Simulation of Economic Systems”. The American Economic Review 50, no. 5 (1960) : 894-907.
Sutherland, Holly. “Constructing a Tax-Benefit Model : What Advice Can One Give ?” Review of Income and Wealth 37, no. 2 (June 1991) : 199-219
|Efekty uczenia się:||
1. The student is able to prepare a data set on the basis of unit data provided by Eurostat.
2. The student is able to describe the variables in the data set.
3. The student is able to perform a statistical descriptive analysis of variables in the database.
4. The student is able to collect and work out the literature on the selected topic.
Symbols of the Ministry of Science and Higher Education: S1A_U01, S1A_U02, S1A_U03, S1A_U04, S1A_U09
1. The student understands the necessity of confronting the theory with empirical data
2. The student understands the limitations resulting from imperfect data sets
3. The student knows how to work in a team, is able to plan an empirical study and jointly prepare a report presenting the results of this research
MNiSW codes: S2A_K01, S2A_K02, S2A_K03
|Metody i kryteria oceniania:||
Work progress and commitment
Zajęcia w cyklu "Semestr zimowy 2022/23" (w trakcie)
Właścicielem praw autorskich jest Uniwersytet Warszawski, Wydział Nauk Ekonomicznych.