Dynamic simulation of taxes and welfare benefits by database imputation

Publication type

Journal Article

Series Number

Authors

Publication date

August 20, 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.

Published in

International Journal of Microsimulation

Volume and page numbers

Volume: 18 , p.124 -155

DOI

https://doi.org/10.34196/ijm.00326

ISSN

17475864

Subjects

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.

#588867

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• Dynamic simulation of taxes and welfare benefits by database imputation

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  2. Patryk Bronka
  3. Matteo Richiardi

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