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UKMOD: A new tax-benefit microsimulation model for the UK

What Is Tax and Benefit Microsimulation? from University of Essex on Vimeo.

Background

Tax-benefit microsimulation models are used to answer “what if” questions about the effects of tax and benefit reforms on household incomes and the income distribution. Such analysis is regularly performed for Budget and other Government policy announcements and is also highly relevant for the design of alternative reforms and new policy instruments.

There are a number of UK tax-benefit models that are regularly maintained and updated but they are usually private, expensive to develop and require specialised skills to use them effectively.

The exception is the UK component of the EU model, EUROMOD.

This 3-year Nuffield Foundation-funded project is adapting, extending and enhancing the UK model – UKMOD – in order to meet the demand for tax-benefit modelling capacity in the UK and to promote its use more widely as a way to improve the evidence base to better inform current policy debates.

A New Tax & Benefit Microsimulation Model: UKMOD from University of Essex on Vimeo.

Activity

Each year, from Autumn 2019, an up-to-date and fully-documented version of UKMOD will be released in October ahead of the Budget. In the following New Year, an updated version of the model will be released that includes policy announcements made in the Budget.

The model will always include the latest tax-benefit policies – that is, those in place – and will also model future policy systems based on announced reforms and income projections. As part of the model’s enhancement, Universal Credit will be fully implemented, including an option for modelling non take-up. Separate policy systems for each of the UK’s constituent nations will allow the user to focus on Scotland, Wales, Northern Ireland or England, as well as the UK as a whole.

UKMOD’s input data will be based on the annual Family Resources Survey (FRS).

The model, running on the established and widely-used EUROMOD platform, will be freely accessible for non-commercial use.

We are also developing new user resources and running events that will allow analysts in public sector organisations, charities and NGOs, think-tanks and beyond to use the model to explore how tax and benefit changes might affect household incomes and government revenues. A key resource will be a Basic Income Case Study, which will provide a concrete illustration of how to use UKMOD to implement and then assess a set of related reforms.

Professor Mike Brewer is leading the UKMOD project. Read his blog article here.

The Nuffield Foundation is an independent charitable trust with a mission to advance social wellbeing. It funds research that informs social policy, primarily in Education, Welfare, and Justice. It also funds student programmes that provide opportunities for young people to develop skills in quantitative and qualitative methods. The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics and the Ada Lovelace Institute. The Foundation has funded this project, but the views expressed are those of the authors and not necessarily the Foundation. Visit www.nuffieldfoundation.org

Team members

Professor Mike Brewer

Director of MiSoC - ISER, University of Essex


Dr Paola De Agostini

Senior Research Officer - ISER, University of Essex


Dr Iva Tasseva

Senior Research Officer - ISER, University of Essex


Dr Kakia Chatsiou

Senior Research Officer - ISER, University of Essex


Kostas Manios

EUROMOD software developer - ISER, University of Essex


Dr Jack Kneeshaw

EUROMOD Executive Director - ISER, University of Essex


Uk money