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Winter School in cross country microsimulation Day 1

Winter School in cross country microsimulation Day 1. Silvia Avram , Alberto Tumino , Chrysa Leventi , Iva Tasseva ISER 26-28 February Course based on EUROMOD v. G1.0+. Outline: Day 1. Morning (9:30-12:30 with a break at 11:00) Tax Benefit Microsimulation and EUROMOD Model Design

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Winter School in cross country microsimulation Day 1

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  1. Winter School in cross country microsimulationDay 1 Silvia Avram, Alberto Tumino, ChrysaLeventi, Iva Tasseva ISER 26-28 February Course based on EUROMOD v. G1.0+

  2. Outline: Day 1 • Morning (9:30-12:30 with a break at 11:00) • Tax Benefit Microsimulation and EUROMOD • Model Design • The EUROMOD User Interface(UI) • Running EUROMOD • Summary Statistics Tool • Error handling Documentation • Afternoon (14:00-17:00 with a break at 15:30) • Hands-on practice: Exercise 1 • EUROMOD functions and parameters

  3. Outline: Day 2 • Morning (9:30-12:30 with a break at 11:00) • Hands-on practice: Exercises 2& 3 • EUROMOD Functions and Parameters (cont.) • Income Lists • Afternoon (14:00-17:00 with a break at 15:30) • Hands-on practice: Exercises 4 & 5 • Hands-on practice: Exercise 6

  4. Outline: Day 3 • Morning (9:30-12:30 with a break at 11:00) • Assessment (tax) units in EUROMOD • Hands-on practice: Exercise 7 • Afternoon (14:00-17:00 with a break at 15:30) • Hands-on practice: Exercises 8 & 9 • Presentations by participants • Using EUROMOD after the course • Q&A

  5. Tax-benefit microsimulation and EUROMOD

  6. Microsimulation • Micro: technique using units (ex: individuals, households, firms etc.) instead of aggregate information • Simulation: application of an intervention that may change the state or behaviour of units • Contribution: estimates results derived from the application of these rules on each unit.

  7. Tax-benefit models Micro: household micro-data Simulation: taxes and benefits Contribution: impact on disposable income

  8. Why tax-benefit microsimulation? • Population diversity and frequency • Policy complexity: detail and interactions Source: Euromod using EU-SILC 2004

  9. What makes EUROMOD special? Multi-country tax-benefit model for the European Union: unique Harmonised data and simulations Very flexible structure (but scope depends on data available) Tax-benefit modelling language: universal Library of policies

  10. What can EUROMOD do? • Simulate previous, current, future and “potential” tax-benefit rules • Distributive analysis • Budgetary effects • Indicators of work incentives • Complex policy reforms (e.g. revenue-neutral) • Policy swapping • Counterfactual (“what if”) scenarios (e.g. stress test) • EU-wide policy reforms • Tax evasion and non-take-up simulation/calibration (special data )

  11. Example Levy, Morawski and Myck, Euromod Working Paper 3/08

  12. EUROMOD in this course • EUROMOD is continuously being developed and improved • Latest public release (G1.0+) • Countries and policies • BE, GR, IT, ES, UK, LT, CZ, HU, EE: 2005-2012 • NL, SE, IE, PT, CY, PL, SI, LV, SK, FR: 2006-2012 • DK, LU, FI, AT, DE, MT, RO, BG : 2007-2012 • Data • EU-SILC data acess issue • training data

  13. Overview of EUROMOD design

  14. Structure Input microdata (text file) Simulations (EURMOD Engine in C++) Output microdata with additional simulated variables (text file) Policy parameters (XML files-EUROMOD UI)

  15. EUROMOD input dataset • Variables: demographic, labour, income, assets, expenditure • Harmonised data reference period • Compulsory variables (e.g., id, age, weight, incomes) • No missing values • Gross income • Monetary variables reported on (average) monthly basis • Documentation (do-files template and DRD) • Currently-based on SILC

  16. Variable name convention Names are combination of acronyms: abb** a – type of information (e.g., y: income, x: expenditure) bb – specific for each type a (e.g., y| em: employment, se: self employment) eg. yem: employment income yse: self-employment income ** further bb’s for additional information/detail eg. ysebs: business self-employment income exception id*, eg. idperson, idmother

  17. EUROMOD policy parameters • Contain all info about tax-benefit rules • Stored in XML files read by the EUROMOD engine • Two files per country • Data config file • Parameters file • Common Variables file (VarConfig.xml) • Manipulated via user interface (UI) • UI-stand alone software based on .NET framework • Implemented via EUROMOD functions grouped in policies • General settings • Defining elements to be used later on (tax units, income lists, constants etc.) • Simulation of policies • Controlling the output file

  18. EUROMODUser Interface

  19. Installation • Requires Microsoft .NET framework files or an Internet connection to download files in the SETUP process • Complete separation between UI and ‘content’ (i.e. XML) files • Only one copy of the UI but can use multiple ‘content’ files • ...but content files must have set structure of folders • Run the Installation Wizard • Set the path to your EUROMOD files • Project path • (if necessary) separate input data and output data paths

  20. EUROMOD folder structure

  21. Linking EUROMOD to content files

  22. User Interface (UI) • Single stand-alone piece of software-Windows OS • Single working environment • Mostly point and click but some hot keys are available (standard and specific) • In-built features that allow for improved user control and guidance • Intuitive!! • Features: • Ribbon bar with tabs • Context menus • IntelliSense (suggestion of parameter values ) • Drag and drop • Bookmarks and comments • Built-in help

  23. User Interface (UI) Ribbon bar Run button Country files

  24. Working environment open country policy systems comments policies

  25. Ribbon bar Country tools: -country must be open to activate buttons -contains options that manipulate the general parameters of a country file -name and acronym -currencies used for parameters in the system and output -which datasets are available and their characteristics -Adding and deleting systems -Viewing options: -full spine vs. single policy -search and replace -formatting -bookmarks -More advanced (import/ export systems, add-ons etc.)

  26. Systems Settings set exchange rate income used for head definition Parameters’ currency output currency

  27. Database settings characteristics of dataset to be filled in adding/ deleting folder where micro-data stored if different from default

  28. Ribbon bar Administration tools: -adding and deleting countries -accessing and administering the variables file -updating progress: overview of available policy systems and datasets More advanced & not covered in this course: -available add-ons -applications (EXCEL based)

  29. EUROMOD Help browse search

  30. Context menus

  31. Context Menus • Activated by right-clicking • Column headings • Row headings • Function headings/ parameter names • Comments • Intuitive options controlling the respective elements

  32. IntelliSense

  33. Variable Administration List of all variables existing in all countries in alphabetical order name Set vbl to monetary or non-monetary automatic label Description of variable for countries where it is used

  34. Adding a variable new empty row; fill in name and monetary

  35. Naming a variable acronyms UI checks validity of name and existence of the variable

  36. Filtering variables select filters

  37. Running EUROMOD select countries select datasets select systems

  38. Running EUROMOD extra options

  39. Running EUROMOD control display of run log and error log status run dialog data and systems running run/ error log

  40. Output files • micro-data (with an optional header) • separate header file (optional) Header (optional) Header Detailed run-time (optional)

  41. Output files • Content manipulated in policy output_std_cc • Usually including: • All variables present in the input microdata file • Simulated variables (i.e. simulated taxes and benefits) • Standardized income lists • (optional) non-standard income lists • (optional) temporary variables • (optional) Tax unit identification info • Control level at which info is outputted (ex: individual, household etc.)

  42. Summary Statistics Tool • Output of EUROMOD= micro-data • Process using a statistical software package (ex. Stata) • Only for training purposes- Summary Statistics Tool • Computes a range of commonly used indicators and statistics: • poverty rates for the overall population and for selected groups and the Gini coefficient • distribution of household income, taxes and benefits by income group • demographic information on households by income group • Currently in Excel • Computed indicators are fixed and cannot be changed  not for ‘real’ analysis!!! • 7 tables produced in Excel

  43. Summary statistics tool enable macros folder where your output file is stored fill in required info one row per output file

  44. Summary Statistics Tool country and system on which statistics calculated one sheet per output file

  45. Implementing a simple reform • Where: • Simpleland • What: • make the child benefit more generous • How: • Open Simpleland • Add a new system where your reform will be implemented

  46. Implementing a simple reform • How: • Open the child benefit policy • Make the changes in the new (reform) system • Run EUROMOD • Analyze results with the Summary Statistics Tool

  47. Error handling produce an error

  48. Error handling info on nature and location of the error

  49. Error handling • Output folder-error log file (text format) • Same info as in the running dialog box • Error logs contain time stamp of their creation • Info about EUROMOD version, policy system where error occurred and dataset used

  50. Documentation • MANUALS • Euromod Terminology all in built-in help • Running Euromod and Basic Concepts • Euromod Functions • COUNTRY REPORTS (CR) (https://www.iser.essex.ac.uk/euromod/resources-for-euromod-users/country-reports) • DATA DESCRIPTION DOCUMENTS (DRD) • WORKING PAPERS (https://www.iser.essex.ac.uk/euromod/working-papers)

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