Approximations to the truth: comparing survey and microsimulation approaches to measuring income for social indicators

Authors

Francesco Figari, Maria Iacovou, Alexandra J. Skew, Holly Sutherland

Publication Date

Jun 2010

Abstract

This paper evaluates income distributions in four European countries (Austria, Italy, Spain and Hungary) using two complementary approaches: a standard approach based on reported incomes in survey data, and a microsimulation approach, where taxes and benefits are simulated. Given that benefit receipts tend to be under-reported in survey data, and over-estimated in microsimulation procedures, we may expect the two approaches to generate slightly different results. In fact, we find reasonably consistent results. To the extent that the results differ, we explore why these differences occur, and suggest directions for future research, where each approach may inform improvements in the other.

Publication type

EUROMOD Working Paper Series

Series Number

EM3/10

Research area

Tax and benefit systems

Notes

working paper

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