Dynamic simulation of taxes and welfare benefits by database imputation
Authors
Justin van de Ven, Patryk Bronka, Matteo Richiardi
Publication Date
Aug 2025
Summary
This paper proposes a new method for describing a realistic tax-benefit system in a dynamic microsimulation model. The suggested approach draws upon existing third-party tax-benefit calculators and provides an alternative to integration of tax functions within a dynamic structure. It has the advantages of adapting to the degree of household sector detail described by a model and permits taxes and benefits to be imputed directly from commonly available micro-data sources. A practical application to a dynamic programming model designed to reflect the contemporary UK policy context indicates that the proposed method for projecting taxes and benefits implies a comparable computational burden and generates qualitatively comparable results to a detailed functional description of fiscal policy, while simplifying model development.
Volume and page numbers
Volume: 18 , p.124 -155
DOI
https://doi.org/10.34196/ijm.00326
Publication type
Journal Article
Research areas
Population changes and labour market dynamics, Tax and benefit systems
Notes
This article is distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use and redistribution provided that the original author and source are credited.; © 2025, Ven et al.
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