Background

Tax-benefit microsimulation modelling is a well-established technique used in many countries around the world for estimating the fiscal, distributional and poverty effects of policy change in the tax and benefit system.

However, modelling of behavioural labour supply responses to such policy changes and modelling of wealth taxes are less well-established. Techniques and data sources used in such modelling vary and, because of the complexities, not all models include these functions.

Outcomes

The aim of this project is to lay the foundations for development of wealth tax modelling and behavioural labour supply modelling within microsimulation models in the UK by:

1. Reviewing existing practice around the world
2. Appraising options for such modelling within the UK, taking into account the policy environment and data availability
3. Suggesting coding approaches

Relevant Links

https://www.jrf.org.uk/whats-the-next-frontier-for-policy-modelling