working papers
(not otherwise published)
Richiardi M (2022). A Basic Income for France: Ideas for a debate. CeMPA Working Paper 6/22
Abstract: The purpose of this note is to discuss the distributional effects of some a priori identified UBI schemes, as an illustration of the different trade-offs involved, and to foster the debate around UBI in France. All these schemes share the feature of retaining some limited form of conditionality - in particular discriminating access to the scheme and generosity of the benefit by age. The first three schemes consider a different UBI for adults of working age, children, and pensioners, are characterised by the elimination of child benefits, unemployment benefits, and other working age benefits, and differ with respect to the increase in tax rates envisaged. On one extreme, we assume no increases in the marginal tax rates: in this case the UBI is funded only by a reduction in other expenditures. We then allow funding to include an increase in revenues, coming from an increase in the marginal tax rates and a decrease in the personal income tax allowance. We find that the option funded only by the elimination of selected targeted benefits is regressive on average, and that only by funding the UBI with a significant increase in general taxation, we are able to obtain a reduction in poverty rates. Finally, we also consider a more limited basic income scheme targeted to young adults between the age of 20 and the age of 24 (included) only, funded by an increase in all marginal tax rates, with no changes to the personal tax allowance). No benefits are eliminated in this case. Results point to drastic improvements for the targeted group and their families, while the costs remain manageable as they are shared by the whole population of taxpayers.
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Richiardi M, Bronka P (2022). LABSim: a dynamic life course model of individual life course trajectories for Italy. CemPA Working Paper 5/22
Abstract: LABSim is a rich dynamic microsimulation model of individual and household life course events, which means that it simulates individual units over time and allows for individual characteristics to be changed according to the processes specified within the model. One of the key innovations in LABSim is its linkage with EUROMOD, a static tax-benefit microsimulation model used to evaluate the immediate distributional impact of policy changes (the “morning after” effect). The static model allows ex-post evaluation of policies, as well as ex-ante evaluation of hypothetical policy changes. When combined with the dynamic model, the policies are applied to an evolving population and evaluated over time.
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van de Ven J, Bronka P, Richiardi M (2022). Dynamic simulation of taxes and welfare benefits by database imputation. CeMPA Working Paper 3/22
Abstract: This paper proposes a new method for imputing taxes and benefits in dynamic microsimulation and agent-based models, which draws upon existing third-party tax-benefit calculators (e.g. EUROMOD). The suggested approach has the advantages of adapting to the degree of related household sector detail described by a model, mitigating computational burden associated with inter-model communications, and permitting taxes and benefits to be imputed directly from commonly available micro-data sources. A practical application of the proposed method is reported for a dynamic programming model designed to reflect the contemporary UK policy context. Reported results indicate that the proposed method for projecting taxes and benefits can imply a comparable computational burden, and generate qualitatively similar results, to a detailed functional description of fiscal policy.
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Lastunen J, Rattenhuber P, Adu-Ababio K, Gasior K, Jara HX, Jouste M, McLennan D, Nichelatti E, Oliveira RC, Pirttilä J, Richiardi M, Wright G (2021). The mitigating role of tax and benefit rescue packages for poverty and inequality in Africa amid the COVID-19 pandemic. WIDER Working Paper 2021/148
Abstract: This paper analyses the distributional effects of the COVID-19 pandemic and related tax-benefit measures in 2020 in a cross-country comparative perspective for five African countries: Ghana, Mozambique, Tanzania, Uganda, and Zambia. We first estimate the impact of the crisis on disposable incomes, how effects vary across the income distribution, and in how far tax-benefit policies stabilized earnings losses. We then evaluate the impact on income-based poverty and inequality and the contribution of discretionary tax-benefit policies in alleviating the shock. Our analysis shows modest increases in headcount poverty rates and inequality, and somewhat larger effects on the poverty gap due to lower relative earnings losses of the poor population at the early stage of the pandemic analysed here. We find very limited stabilizing power of tax-benefit policies overall and automatic stabilizers in particular. This illustrates gaps in coverage for the large informal sector and a general lack of income-related means-tested benefits. Except for the Emergency Social Cash Transfer in Zambia, discretionary tax-benefit policies adopted in response to COVID-19 have had limited impact. Pausing a large school feeding programme in Ghana during lockdown has in turn put additional pressure on households with school-age children.
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Collado C, Popova D, Richiardi M (2021). Covid-19 and financial hardship in London. CeMPA WP 9/21
Abstract: Using UKMOD, the UK tax-benefit microsimulation model, we analyse the impact on Londoners of the Covid-19 crisis, of the emergency policies put in place since March 2020 and of some counterfactual policy options, including the continuation of the £20 weekly uplift in Universal Credit and Working Tax Credit. Our main results can be summarised as follows: 1) The emergency measures introduced by the Government in March 2020 proved very effective at protecting the incomes of Londoners, particularly some of the most disadvantaged groups. 2) Withdrawing the £20 a week uplift to Universal Credit and Working Tax credits will put 130,000 more Londoners in poverty, with some of the most disadvantaged groups, including 60,000 lone parents, being disproportionately affected. The number of Black Londoners living in poverty would grow by 8% compared to 6% for all ethnic groups. 3) Less well-off Londoners will be worst affected, with the poorest 10% experiencing an 8% decrease in their incomes. 4) While Londoners will be more affected than the rest of the country by the withdrawal of the £20 uplift; across the UK, the poorest 10% of people will see their incomes cut by 5%. 5) On the other hand, keeping the £20 a week uplift to Universal Credit and Working Tax credits and going further by removing all the Benefit Caps would cut child poverty in London by 10%, keeping more than 70,000 children out of poverty.
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Richiardi M, He Z (2020). Measuring economic insecurity: A simulation approach. CeMPA Working Paper 02/20
Abstract: We suggest a new individual-based measure of economic insecurity where expectations about the future evolution of individual life courses are derived from a dynamic simulation model. This allows to take into account risks over many dimensions including work, family and health. On the earning side, we summarise the uncertainty over future income trajectories with a monotonically increasing concave function of income, which penalises income volatility over time and over possible individual trajectories while assigning higher value to higher levels of economic resources available. On the expenditure side, we take into account different household characteristics by means of appropriate equivalence scales.
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Richiardi M, He Z (2020). Measuring economic insecurity: A review of the literature. CeMPA Working Paper 01/20
Abstract: Economic (in)security is attracting a growing interest in the social policy debate. However, there is a lack of consensus about how to measure it. In this paper we review the existing measures of economic insecurity, with a particular emphasis on objective measures. Our assessment is that all the measures are to some extent arbitrary, and that no clear consensus has so far emerged in the literature. This stems from some analytical confusion that still surrounds the concept, and from the lack of clear normative foundations. We also identify and discuss some characteristics that ideal measures of economic insecurity should have.
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Richiardi M, Valenzuela L (2019). Firm Heterogeneity and the Aggregate Labour Share. INET Working Paper No. 2019-08.
Abstract: Using a static model of firm behaviour with imperfect competition on the product and labour markets, we quantify the effect of firm heterogeneity in total factor productivity, market power, capital, wages and prices on the aggregate labour share. In particular, we suggest a new decomposition of the aggregate labour share in terms of the first moments of the joint distribution of these variables across firms, providing a bridge between the micro and the macro approach to functional distribution. We provide an application of our method to the UK manufacturing sector, using firm-level data for the period 1998-2014. The analysis confirms that heterogeneity matters: in an economy populated only by representative firms, the labour share would be 10 percentage points lower. Among all the dimensions studied, heterogeneity in total factor productivity and labour market power are the most relevant ones, whereas heterogeneity in product market power matters the least, with wages and prices in between. However, the observed fall in the aggregate labour share over the period is mostly explained by a widening of the disconnect between average productivity and real wages, with a smaller role for an increase in the average product and labour market power of firms after the Great Recession, while changes in the dispersion of these variables mostly offset each other..
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Richardson R, Richiardi M, Wolfson M (2015). We ran one billion agents. Scaling in simulation models. Nuffield College Economic Working Papers Series 2015-W05.
Abstract: We provide a clarification of scaling issues in simulation models, distinguishing between sample size determination, discovery of emergent properties involving a qualitative change in the behaviour of the system at an aggregate level, and ‘true’ scaling, the dependence of the quantitative behaviour of the system at any given level of aggregation, to its size. Scaling issues arise because we want to understand what happens when we run one billion agents, without actually having to run one billion agents. We discuss how we can use the Buckingham Pi theorem, a key tool in dimensional analysis, to provide guidance on the nature and structure of scaling relationships in agent-based models.
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Richiardi M (2015). Liberia. Expanding formal employment through labour market reforms. LABORatorio Revelli WP 144/2015.
Abstract: The objective of this report is to provide an assessment of labor market regulations in Liberia, in particular employment protection legislation (EPL), minimum wages, and social insurance schemes. This is particularly relevant as a new labor code, the Decent Work Bill, has just been legislated with a twofold increase in the minimum wage, rising concerns that it will further reduce an already limited demand for formal employment (less than 20% of total employment). Without changing the Decent Work Bill, which is taken as a political constraint, the report makes proposals for reforms “at the margin” aimed at extending demand for formal employment, with specific social insurance schemes targeted at the newly formalized employees.
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Richiardi M, Sonnessa M. (2013). JAS 2: A new Java platform for agent-based and microsimulation modeling. LABORatorio Revelli WP 134/2013.
Abstract: We present JAS 2, a new Java platform that aims at providing a unique simulation tool for discrete-event simulations, including agent-based and microsimulation models. With the aim to develop large-scale, data-driven models, the main architectural choice of JAS 2 is to use whenever possible standard, open-source tools already available in the software development community. The main value added of the platform lies in the integration with RDBMS (relational database management) tools through ad-hoc microsimulation Java libraries. The management of input data persistence layers and simulation results is performed using standard database management tools, and the platform takes care of the automatic translation of the relational model (which is typical of a database) into the object-oriented simulation model, where each category of individuals or objects that populate the model is represented by a specific class, with its own properties and methods. JAS 2 allows to separate data representation and management, which is automatically taken care of by the simulation engine, from the implementation of processes and behavioral algorithms, which should be the primary concern of the modeler. This results in quicker, more robust and more transparent model building.
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Berton F, Richiardi M, Sacchi S (2009). Labor-Urge Policy Paper - Curare la precarietà: proposte per un dibattito. LABORatorio Revelli WP 91/2009.
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Baroni E, Richiardi M (2007). Orcutt’s Vision, 50 years on. LABORatorio Revelli WP 65/2007.
Abstract: Fifty years have passed since the seminal contribution of Guy Orcutt [Orcutt, 1957], which gave birth to the field of Microsimulation. We survey, from a methodological perspective, the literature that followed, highlighting its relevance, its pros and cons vis-a-vis other methodologies and pointing out the main open issues.
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Bonaventura L, Consoli A, Richiardi M, Spagano S (2006). Politics and the Labor Market: The Role of Frictions. LABORatorio Revelli WP 53/2006.
Abstract: We study how political intermediation in the labor market interacts with search frictions. Politicians create and control (to a certain extent) business opportunities for firms, hence the creation of new vacancies. But to compete for these vacancies workers have to give their support to politicians. This leads to a fragmentation of the labor market, where politicians act as mediators between demand and supply. We show that in presence of information asymmetries (when non-aliated workers are not able to distinguish non-affiliated firms, for which they are eligible, from affiliated ones, for which they are not eligible) the impact of political intermediation is U-shaped, and can more than double the resulting unemployment rate.
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