Projects per year
Abstract
This chapter reviews the use of microsimulation in understanding income inequality. The primary added value of microsimulation models is the capacity to simulate counterfactual income distributions. While much of the literature concentrates on the ex ante simulation of tax and welfare policy reforms and their effect on income distribution, this chapter also discusses the use of simulation techniques to tease out the contribution of different market and policy income sources and personal characteristics. In particular, decomposition techniques combined with microsimulation modeling allow for the interaction effects between these components to be explored in more granular detail, specifically interactions between markets, population characteristics and market incomes, and the interactions of all of these with tax and welfare. This chapter first justifies the use of microsimulation techniques in the study of income inequality. Second, the chapter discusses the gradual methodological developments in understanding the nature of inequality via the simulation of “counterfactual” outcomes using microsimulation techniques. Third, the chapter discusses the latest developments in the field, including nowcasting distributional changes in times of crisis, micro-macro linkages, and decomposing inequality across population groups and across space.
Highlights:
- The unique ability of microsimulation to explore "what-if" scenarios in policy and market income;
- Decomposition techniques that reveal detailed interactions between market forces, population characteristics, and government policies;
- Advanced methods for tracking income distribution changes during economic crises and understanding inequality dynamics in different geographical and demographic settings.
Highlights:
- The unique ability of microsimulation to explore "what-if" scenarios in policy and market income;
- Decomposition techniques that reveal detailed interactions between market forces, population characteristics, and government policies;
- Advanced methods for tracking income distribution changes during economic crises and understanding inequality dynamics in different geographical and demographic settings.
Original language | English |
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Title of host publication | Handbook of Labor, Human Resources and Population Economics |
Editors | K.F. Zimmermann |
Place of Publication | Cham |
Publisher | Springer |
Pages | 1-37 |
Number of pages | 37 |
ISBN (Electronic) | 978-3-319-57365-6 |
ISBN (Print) | 978-3-319-57365-6 |
DOIs | |
Publication status | Published - 11 Aug 2023 |
Publication series
Name | Handbook of Labor, Human Resources and Population Economics |
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Publisher | Springer Nature |
Keywords
- Income Inequality Analysis
- Microsimulation Models
- Economic Policy Impact
- Counterfactual Income Distribution
- Market Income Sources
- Inequality Decomposition
- Economic Crisis and Inequality
- Geographical Income Disparities
- Demographic Inequality Factors
- Income Distribution Dynamics
Projects
- 2 Active
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SPIN: Spatial Economics of Income Distribution Across Borders: Drivers of Spatial Inequalities using Microsimulation
Sologon, D. (PI), O’Donoghue, C. (Non Contracting Partner), Andreoli, F. (CoI), Gerber, P. (CoI), Licheron, J. (CoI), Montes Vinas, A. (CoI) & Paccoud, A. (CoI)
Fonds National de la Recherche Luxembourg
1/09/23 → 30/11/26
Project: Research
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ECOMOD: Capacity building in environmental and economic policy modelling and data analysis
Sologon, D. (PI), Liégeois, P. (CoI), Montes Vinas, A. (CoI), O’Donoghue, C. (Contracting Partner), Kirn, T. (Partner PI), Neumärker, B. (CoI), Richiardi, M. (CoI), Colombino, U. (CoI), Schupp, J. (CoI), Bach, S. (CoI) & Pearce, N. (Non Contracting Partner)
1/09/23 → 28/02/26
Project: Research