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Assessing the Impact of Tax/Transfer Policy Changes on Poverty: Methodological Issues and Some European Evidence

In: Micro-Simulation in Action

Author

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  • Tim Callan
  • Kieran Coleman
  • John Walsh

Abstract

A method of systematically assessing the “first-round” impact of tax and transfer policy changes on the income distribution and the incidence of relative income poverty is proposed. It involves the construction of a “distributionally neutral” policy, which can be approximated by a policy that indexes tax allowances, credits and bands and welfare payment rates in line with a broad measure of income growth. The impact of actual policy changes in five EU countries over the 1998–2001 period is then measured against this benchmark, using the EUROMOD tax-benefit model.

Suggested Citation

  • Tim Callan & Kieran Coleman & John Walsh, 2006. "Assessing the Impact of Tax/Transfer Policy Changes on Poverty: Methodological Issues and Some European Evidence," Research in Labor Economics, in: Micro-Simulation in Action, pages 125-139, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-9121(06)25005-2
    DOI: 10.1016/S0147-9121(06)25005-2
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    References listed on IDEAS

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    1. Immervoll, Herwig, 2000. "The impact of inflation on income tax and social insurance contributions in Europe," EUROMOD Working Papers EM2/00, EUROMOD at the Institute for Social and Economic Research.
    2. Callan, Tim & Nolan, Brian & Walsh, John R., 1998. "Income Tax and Social Welfare Policies," Papers BP1999/2, Economic and Social Research Institute (ESRI).
    3. repec:esr:chaptr:jacb199808 is not listed on IDEAS
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    1. repec:esr:wpaper:bp2016/1 is not listed on IDEAS
    2. Olivier Bargain & Tim Callan, 2010. "Analysing the effects of tax-benefit reforms on income distribution: a decomposition approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(1), pages 1-21, March.
    3. Olivier Bargain, 2009. "The distributional effects of tax-benefit policies under New Labour : a Shapley decomposition," Working Papers 200907, School of Economics, University College Dublin.
    4. Ong, Rachel & Graham, James & Cigdem, Melek & Phelps, Christopher & Whelan, Stephen, 2023. "Financing first home ownership: modelling policy impacts at market and individual levels," SocArXiv p59te, Center for Open Science.
    5. Callan, Tim & Nolan, Brian & Walsh, John R. & Whelan, Christopher T. & Maitre, Bertrand, 2008. "Tackling Low Income and Deprivation: Developing Effective Policies," Research Series, Economic and Social Research Institute (ESRI), number RS1.
    6. Li, Jinjing & O'Donoghue, Cathal, 2011. "Incentives of Retirement Transition for Elderly Workers: An Analysis of Actual and Simulated Replacement Rates in Ireland," IZA Discussion Papers 5865, Institute of Labor Economics (IZA).
    7. Mantovani, Daniela & Lietz, Christine, 2006. "Lessons from building and using EUROMOD," EUROMOD Working Papers EM5/06, EUROMOD at the Institute for Social and Economic Research.
    8. Philippe Liégeois & Frédéric Berger & Nizamul Islam & Raymond Wagener, 2011. "Cross-validating administrative and survey datasets through microsimulation," International Journal of Microsimulation, International Microsimulation Association, vol. 4(1), pages 54-71.
    9. Olivier Bargain, 2012. "Decomposition analysis of distributive policies using behavioural simulations," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 708-731, October.
    10. LI Jinjing & LA Hai anh & SOLOGON Denisa, 2019. "Policy, demography and market income volatility: What was shaping income distribution in Australia between 2002 and 2016?," LISER Working Paper Series 2019-02, Luxembourg Institute of Socio-Economic Research (LISER).

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