Research

With: Adnan A. Shahir, Pia Rattenhuber, Kwabena Adu-Ababio, Rodrigo C. Oliveira

Book: Cushioning against Crises: The Role of Tax-Benefit Systems in the Developing World, Oxford University Press, 2024

Abstract: We examine the distributional effects of the COVID-19 pandemic and associated tax-benefit measures in seven Sub-Saharan African countries, focusing on the onset of the crisis. We evaluate impacts on disposable incomes, considering variations across income groups; assess the effectiveness of tax-benefit policies in mitigating income losses; and analyse the influence of these measures on income-based poverty and inequality. We find notable reductions in disposable incomes, concentrated among higher-income households, and moderate increases in headcount poverty rates and poverty gaps. The study highlights the low effectiveness of pre-existing tax-benefit policies, with coverage gaps for the informal sector and a lack of income-dependent means-tested benefits. Discretionary tax-benefit policies in Mozambique and Zambia cushioned the shock for low-income households to a small extent. Conversely, school closures in Ethiopia and Ghana suppressed the provision of school meals, adding strain to households with school-age children.

Citation: Lastunen, J., Shahir, A.A., Rattenhuber, P., Adu-Ababio, K. & Oliveira, R.C. Performance of Tax-benefit Systems during the COVID-19 Pandemic in Sub-Saharan Africa: A Comparative Perspective (in 'Cushioning against Crises: The Role of Tax-Benefit Systems in the Developing World', edited by Jouste, J., Kanbur, R., Pirttilä, J. & Rattenhuber, P.), Oxford University Press, 2024, forthcoming.

With: Antoine de Mahieu

Book: Cushioning against Crises: The Role of Tax-Benefit Systems in the Developing World, Oxford University Press, 2024

Abstract: This paper investigates the impact of the COVID-19 pandemic and related tax-benefit measures in Viet Nam, relying on tax-benefit microsimulation modelling. The focus is on the initial phase of the crisis in 2020. The study delves into how the pandemic affected disposable incomes, examining the differences across the income distribution and impacts on measures of poverty and inequality. The paper also evaluates the effectiveness of tax-benefit policies in alleviating income losses. The findings suggest that disposable incomes decreased by nearly 2.25 per cent on average, with the most pronounced effect experienced by higher-income households. The estimates point to moderate increases in both the headcount poverty rate and the extent of poverty, as measured by the poverty gap. Automatic stabilizers had a limited effect in cushioning the income shock. The discretionary social protection measures adopted in response to the crisis, however, halved the pandemic-induced rise in the national poverty rate.

Citation: de Mahieu, A. & Lastunen, J. The Cushioning Effects of Tax-benefit Policies in Viet Nam during the COVID-19 Pandemic (in 'Cushioning against Crises: The Role of Tax-Benefit Systems in the Developing World', edited by Jouste, J., Kanbur, R., Pirttilä, J. & Rattenhuber, P.), Oxford University Press, 2024, forthcoming.

With: Rodrigo C. Oliveira, Pia Rattenhuber, Melissa Samarin, Adnan A. Shahir

Book: Cushioning against Crises: The Role of Tax-Benefit Systems in the Developing World, Oxford University Press, 2024

Abstract: In the wake of the COVID-19 pandemic, several countries enacted tax and social protection measures to help mitigate the economic hardship faced by individuals and households. This experience underscores the need to better understand the impact of such programmes on incomes and poverty during crises, especially in low- and middle-income countries where they are most needed. This paper reviews existing empirical literature on the subject, conducting a scoping review on quantitative studies published between 2000 and 2022.

Citation: Oliveira, R., Lastunen, J., Rattenhuber, P., Samarin, M. & Shahir, A.A. The Role of Social Protection and Tax Policies in Cushioning Crisis Impacts on Income and Poverty in Low- and Middle-income Countries: A Rapid Scoping Review (in 'Cushioning against Crises: The Role of Tax-Benefit Systems in the Developing World', edited by Jouste, J., Kanbur, R., Pirttilä, J. & Rattenhuber, P.), Oxford University Press, 2024, forthcoming.

With: Milla Nyyssölä, Lauri Heimo, Kristiina Karjanlahti, Nea Tiililä

Book: Johdatus Globaaliin Sosiaalipolitiikkaan, Vastapaino, 2024

Abstract: This chapter provides the first Finnish-language overview of the types of economic and social policies that low- and middle-income countries implemented to mitigate the negative effects of economic shocks, how successful or effective these policies were, and how policy measures taken during crises affect post-crisis policies. The topic is assessed through both a social policy and an economic lens. 

Finnish abstract: Luku tarjoaa ensimmäisen suomenkielisen kokoavan katsauksen siihen, millaista talous- ja sosiaalipolitiikkaa matalan ja keskitulotason maat ovat käytännössä harjoittaneet lievittääkseen talousshokkien negatiivisia vaikutuksia, kuinka onnistunutta tai tehokasta tämä politiikka on viime aikoina ollut ja miten kriisien aikana toteutetut politiikkatoimet vaikuttavat politiikkaan kriisien jälkeen. Aihetta lähestytään sekä sosiaalipolitiikan että taloustieteen näkökulmasta.

Citation: Lastunen, J., Nyyssölä, M., Heimo, L., Karjanlahti, K. & Tiililä, N. Talousshokit hyvinvoinnin haasteena – sosiaali- ja talouspolitiikkatoimet kehittyvissä maissa (in 'Johdatus Globaaliin Sosiaalipolitiikkaan', edited by Heimo, L. & Lambin, R.), Vastapaino, 2024, forthcoming.

With: Adnan A. Shahir, Pia Rattenhuber, Kwabena Adu-Ababio, Rodrigo C. Oliveira

Published in: UNU-WIDER Working Paper Series, 2023

Abstract: We examine the distributional effects of the COVID-19 pandemic and associated tax-benefit measures in seven sub-Saharan African countries, focusing on the onset of the crisis. We evaluate impacts on disposable incomes, considering variations across income groups; assess the effectiveness of tax-benefit policies in mitigating income losses; and analyse the influence of these measures on income-based poverty and inequality. We find notable reductions in disposable incomes, concentrated among higher-income households, and moderate increases in headcount poverty rates and poverty gaps. The study highlights the low effectiveness of pre-existing tax-benefit policies, with coverage gaps for the informal sector and a lack of income-dependent means-tested benefits. Discretionary tax-benefit policies in Mozambique and Zambia cushioned the shock for low-income households to a small extent. Conversely, school closures in Ethiopia and Ghana suppressed the provision of school meals, adding strain to households with school-age children.

Citation: Lastunen, J., Shahir, A.A., Rattenhuber, P., Adu-Ababio, K. & Oliveira, R.C. Performance of Tax-benefit Systems amid COVID-19 Crises in Sub-Saharan Africa: A Comparative Perspective, WIDER Working Paper 130/2023, Helsinki: UNU-WIDER, 2023. https://doi.org/10.35188/UNU-WIDER/2023/438-0

With: Antoine de Mahieu

Published in: UNU-WIDER Working Paper Series, 2023

Abstract: This paper investigates the impact of the COVID-19 pandemic and related tax-benefit measures in Viet Nam. The focus is on the initial phase of the crisis in 2020. The study delves into how the pandemic affected disposable incomes, examining the differences across the income distribution and impacts on measures of poverty and inequality. The paper also evaluates the effectiveness of tax-benefit policies in reducing income losses caused by the pandemic, covering both the automatic stabilization of the pre-existing tax-benefit system and discretionary policy measures adopted in response to the crisis. The findings suggest that disposable incomes decreased by nearly 2.25 per cent on average, with the most pronounced effect experienced by higher-income households. Additionally, the estimates point to moderate increases in both the headcount poverty rate and the extent of poverty, as measured by the poverty gap. Automatic stabilizers had a limited effect in cushioning the income shock. The discretionary social protection measures, however, halved the pandemic-induced rise in the national poverty rate and fully reversed income losses for the poorest income quartile.

Citation: de Mahieu, A. & Lastunen, J. Addressing Poverty and Inequality in Viet Nam during the COVID-19 Pandemic: An Examination of the Alleviating Impact of Tax and Benefit Measures, WIDER Working Paper 2023/120, Helsinki: UNU-WIDER, 2023. https://doi.org/10.35188/UNU-WIDER/2023/428-1

With: Rodrigo Oliveira, Pia Rattenhuber, Melissa Samarin, Adnan A. Shahir

Published in: UNU-WIDER Working Paper Series, 2023 

Abstract: In the wake of the COVID-19 pandemic, several countries enacted tax and social protection measures to help mitigate the economic hardship faced by individuals and households. This experience underscores the need to better understand the impact of such programmes on incomes and poverty during crises, especially in low- and middle-income countries (LMICs) where they are most needed. This paper reviews existing empirical literature on the subject, conducting a scoping review on quantitative studies published between 2000 and 2022. Following a structured selection approach, we identify 38 studies about the role of social protection and taxation in LMICs during periods of crisis. The results reveal that LMICs often enact both vertical and horizontal expansions of existing unconditional cash transfer schemes during crises, although the applications vary by geography. Our research also suggests a sharp increase in recent studies because of the COVID-19 pandemic, and a large variety of methods used to study the subject. In terms of effects, social protection can help cushion households against crises, but the effect size depends on the policy adopted, country context, and type of crisis. The minimal empirical evidence about tax policy studies do not enable us to draw conclusions.

Citation: Oliveira, R., Lastunen, J., Rattenhuber, P., Samarin, M. & Shahir, A.A. The Role of Social Protection and Tax Policies in Cushioning Crisis Impacts on Income and Poverty in Low- and Middle-income Countries: A Rapid Scoping Review, WIDER Working Paper 2023/6. Helsinki: UNU-WIDER, 2023. https://doi.org/10.35188/UNU-WIDER/2023/314-7

With: Antoine de Mahieu, Jeannette Mukangango, Theogene Harerimana

Published in: UNU-WIDER Working Paper Series, 2023

Abstract: Establishing an equitable and efficient tax system is essential for reducing poverty, combating inequality, and fostering sustainable economic growth. Rwanda’s government has recognized this and implemented significant changes to the personal income tax schedule for 2023 and 2024 as part of broader tax reforms set forth in its Medium-Term Revenue Strategy. This study examines the fiscal and distributional effects of the personal income tax changes, employing a newly-created tax-benefit microsimulation model for Rwanda. Specifically, we compare the reform to a business-as-usual scenario with the previous income tax regime. The analysis shows that the reform enhances the disposable income of many workers, albeit at the expense of reduced government revenue. At the population level, the reform predominantly benefits the highest income deciles, who constitute the majority of income taxpayers in Rwanda. The lowest deciles, for the most part, remain unaffected by the changes.

Citation: de Mahieu, A., Lastunen, J., Mukangango, J. & Harerimana, T. Evaluating the Impact of the 2023–2024 Personal Income Tax Reform in Rwanda: An Analysis using Tax-benefit Microsimulation Modelling, WIDER Working Paper 2023/73, Helsinki: UNU-WIDER, 2023. https://doi.org/10.35188/UNU-WIDER/2023/381-9

With: Antoine de Mahieu, Jeannette Mukangango, Theogene Harerimana, Naphtal Hakizimana, John Karangwa, Aimable Nsabimana, Lucie Niyigena, Michael Noble, Gemma Wright

Published as: UNU-WIDER Report, 2023

Abstract: This report documents RWAMOD, the SOUTHMOD model developed for Rwanda. It describes the different tax-benefit policies in place, how the microsimulation model picks up these different provisions, and the database on which the model runs. It concludes with a validation of RWAMOD results against external data sources.

Citation: de Mahieu, A., Mukangango, J., Harerimana, T., Lastunen, J., Hakizimana, N., Karangwa, J., Nsabimana, A., Niyigena, L., Noble, M. & Wright, G. SOUTHMOD Country Report Rwanda: RWAMOD v1.0, 2017–22, Helsinki: UNU-WIDER, 2023.

With: Naphtal Hakizimana, John Karangwa, Aimable Nsabimana, Innocente Murasi, Lucie Niyigena, Michael Noble, Gemma Wright

Published in: UNU-WIDER Working Paper Series, 2022

Abstract: This paper assesses the feasibility of developing a tax and benefit microsimulation model in Rwanda. Tax-benefit microsimulation can be used to explore ways in which national development goals can be achieved in a cost-effective manner, and to assess the distributional effects of more comprehensive social security arrangements. The paper presents an account of Rwanda’s tax and benefit policies as well as a possible underpinning dataset—the Integrated Household Living Conditions Survey—for a tax-benefit microsimulation model, concluding that developing such a model for Rwanda would be feasible. 

Citation: Hakizimana, N., Karangwa, J., Lastunen, J., Nsabimana, A., Murasi, I., Niyigena, L., Noble, M. & Wright, G. Tax-Benefit Microsimulation Model in Rwanda: A Feasibility Study, WIDER Working Paper 2022/72, Helsinki: UNU-WIDER, 2022. https://doi.org/10.35188/UNU-WIDER/2022/203-4

With: Abdoul-Akim Wandaogo, Fayçal Sawadogo

Published in: UNU-WIDER Working Paper Series, 2022

Abstract: Developing countries need to raise sufficient tax revenue to finance development. Revenue mobilization is often hampered by limited tax compliance, weak institutions, and technical problems with tax collection. One solution to these challenges is person-to-government (P2G) mobile phone payments, adopted in a number of developing countries since the early 2000s. This study assesses the causal effect of P2G adoption on tax revenue using propensity score matching. According to the matching estimates, countries that adopt P2G services experience a 1.2–1.3 percentage point boost in direct tax revenue as a share of GDP. P2G adoption increases revenue from both corporate and personal income taxes, with larger effects on the latter. The results remain robust to matching quality tests and alternative estimation methods, including function control, two-stage least squares, and system generalized method of moments. The average treatment effects are largest among lower-middle-income countries and countries characterized by limited tax compliance and corruption control, and by low levels of urbanization and domestic credit to the private sector. The findings suggest that developing countries, particularly those with poor institutions and low levels of financial inclusion, should promote the adoption and use of mobile money services for tax transactions.

Citation: Wandaogo, A.-A., Sawadogo, F. & Lastunen, J. Does the Adoption of Peer-to-government Mobile Payments Improve Tax Revenue Mobilization in Developing Countries?, WIDER Working Paper 2022/18, Helsinki: UNU-WIDER, 2022. https://doi.org/10.35188/UNU-WIDER/2022/149-5

With: Ronald Waiswa, Gemma Wright, Michael Noble

Joseph Okello Ayo, Milly Isingoma Nalukwago, Tina Kaidu Barugahara, Susan Kavuma, Isaac Arinaitwe, Martin Mwesigye, Wilson Asiimwe, Pia Rattenhuber

Published in: UNU-WIDER Working Paper Series, 2021

Abstract: Presumptive tax, a final tax on business income, was introduced in Uganda in 1997. The latest reform to the regime in July 2020 sought to make the system more progressive, simpler, and fairer to small firms. In this work, we evaluate the reform, focusing on its revenue implications based on simulations using UGAMOD, a tax-benefit microsimulation model for Uganda. Our findings suggest that, assuming full compliance, the reform reduces tax revenue potential by between 48–72 per cent from the previous rules. Interviews with staff at the Uganda Revenue Authority point to further challenges with the new rules, including slow implementation, ineffective enforcement, and enduring complexity. To address these concerns, we modelled a number of hypothetical reform scenarios, including a 1 per cent and 1.5 per cent flat tax regimes for small businesses with turnover between UGX10–150 million. A low flat tax rate would be a major improvement to the existing presumptive tax regime, as it satisfies the calls for further simplification, is estimated to generate more short-term revenue than the current regime based on the modelling, and has realistic potential to attract more presumptive taxpayers over time.

Citation: Waiswa, R., Lastunen, J., Wright, G., Noble, M., Okello Ayo, J., Isingoma, N.M., Kaidu, T., Kavuma, S., Arinaitwe, I., Mwesigye, M., Asiimwe, W. & Rattenhuber, P. An Assessment of Presumptive Tax in Uganda: Evaluating the 2020 reform and four alternative reform scenarios using UGAMOD, a tax-benefit microsimulation model for Uganda, WIDER Working Paper 2021/163, Helsinki: UNU-WIDER, 2021. https://doi.org/10.35188/UNU-WIDER/2021/103-7

With: Ronald Waiswa, Gemma Wright, Michael Noble, Joseph Okello Ayo, Milly Isingoma Nalukwago, Tina Kaidu Barugahara, Susan Kavuma, Isaac Arinaitwe, Martin Mwesigye, Wilson Asiimwe, Pia Rattenhuber

Published in: UNU-WIDER Policy Brief Series, 2021

Findings: Many countries in Africa have designed simplified tax regimes for small businesses, including presumptive tax, a form of income tax charged on turnover. In Uganda, the most recent presumptive tax reform in July 2020 sought to address past challenges of complexity, regressivity and high tax rates. While the new reform simplifies the presumptive tax regime, it also suffers from challenges with enforcement and has low revenue potential. Alternative reforms presented in this brief, including a low-rate flat tax system, offer ways to simplify the presumptive regime further, with potential to support long-run compliance and revenue generation

Citation: Waiswa, R., Lastunen, J., Wright, G., Noble, M., Okello Ayo, J., Isingoma, N.M., Kaidu, T., Kavuma, S., Arinaitwe, I., Mwesigye, M., Asiimwe, W. & Rattenhuber, P. New Directions for Presumptive Tax in Uganda, WIDER Policy Brief 2021/8, Helsinki: UNU-WIDER, 2021.

With: Pia Rattenhuber, Kwabena Adu-Ababio, Katrin Gasior, Xavier Jara, Maria Jouste, David McLennan, Enrico Nichelatti, Rodrigo Oliveira, Jukka Pirttilä, Matteo Richiardi, Gemma Wright

Published in: UNU-WIDER Working Paper Series, 2021

Abstract: This paper analyses the distributional effects of the COVID-19 pandemic and related tax-benefit measures in 2020 from 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.

Citation: Lastunen, J., Rattenhuber, P., Adu-Ababio, K., Gasior, K., Jara, X.H., Jouste, M., McLennan, D., Nichelatti, E., Oliveira, R.C., Pirttilä, J., Richiardi, M. & Wright, G. 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, Helsinki: UNU-WIDER, 2021. https://doi.org/10.35188/UNU-WIDER/2021/088-7

With: Gemma Wright, Michael Noble, Ronald Waiswa, Joseph Okello Ayo, Milly Isingoma Nalukwago

Published in: UNU-WIDER Policy Brief Series, 2021

Findings: The coronavirus pandemic has had a significant impact on the Ugandan economy. In 2020, Uganda’s GDP growth rate was its lowest since 2000, owing to weak growth in services. With the exception of food relief and tax deferrals, the government did not implement new tax-benefit measures to support vulnerable populations during the crisis. The general tax-benefit system also had a negligible effect on cushioning income losses.

Citation: Lastunen, J., Wright, G., Noble, M., Waiswa, R., Okello Ayo, J. & Isingoma, N.M. Distributional Effects of the COVID-19 Pandemic in Uganda, WIDER Policy Brief 2021/5, Helsinki: UNU-WIDER, 2021.

Report for: Internet Association, 2018

Abstract: This study examines the impact of autonomous vehicles (AVs) on the employment prospects of professional drivers in the United States by 2040. I estimate both the number of jobs drivers lose to AVs and the number of new jobs that the AV industry generates for unemployed drivers. Since fully autonomous vehicles are expected to reach a market share of no more than 10 to 20 percent by 2030, driver mass unemployment is extremely unlikely before the 2030s. According to my four central estimates, the proportion of drivers that become unemployed (or employed outside the AV industry) will be at most 3% by 2025 and 12% by 2030. The estimates also suggest that the AV industry and related business models can by themselves easily repurpose all jobless drivers by that time. From 2030 onwards, however, all estimates point to substantial labor market impacts. If the effect of AVs on labor demand is not much smaller than projected, the proportion of drivers that become unemployed or employed outside the AV industry will be between 10–29% by 2035 and 19–78% by 2040 (10% and 33% in the central estimates). As job replacement speeds up, AV-supported jobs cover a smaller portion of lost driving jobs (90% in 2030, but only 41% in 2035 and 18% in 2040 in the central scenario).

Citation: Lastunen, J. Scenarios of the Role of Autonomous Vehicles in Society: Estimating the Net Impact on Professional Driving Jobs, research report, Internet Association, 2018.

With: Michael Noble

Published in: UNU-WIDER Technical Note Series, 2023

Abstract: SOUTHMOD tax-benefit microsimulation models may in some cases oversimulate taxes or benefits, generating greater expenditure, a greater number of beneficiaries, or greater amounts of taxes or taxpayers than reported in administrative data. Drawing on an example of a social benefit policy in Rwanda, implemented in the RWAMOD model, this technical note shows why such issues can be important in the analysis of tax-benefit policy reforms. The note also shows how oversimulation can be addressed in SOUTHMOD models by downward adjustment of relevant taxes and benefits.

Citation: Noble, M. & Lastunen, J. Dealing with the Oversimulation of Taxes and Benefits in SOUTHMOD Microsimulation Models: The Case of Girinka in Rwanda, WIDER Technical Note 2023/2, Helsinki: UNU-WIDER, 2023. https://doi.org/10.35188/UNU-WIDER/WTN/2023-2

Published in: UNU-WIDER Technical Note Series, 2022

Abstract: This note describes methods to derive employment-to-unemployment transition shares across industries during the COVID-19 pandemic and to use these shares in SOUTHMOD tax-benefit microsimulation models to adjust relevant labour market variables. The first method entails the derivation of industry-specific output shocks from sectoral GDP data, which are used as a proxy for the sectoral shares of workers who transition to unemployment with zero earnings. The second method involves creating a new policy (lma_cc) in a given country model. In this policy, the transition shares are used to allocate randomly selected workers within industries into unemployment and to adjust their incomes to account for the crisis. The analysis follows another technical note on the derivation of sectoral GDP shocks and income adjustments. By presenting an approach to adjust labour market variables inside the EUROMOD software, this note offers an alternative to previous research relying on SOUTHMOD models where such adjustments are applied to model input data.

Citation: Lastunen, J. On-model Adjustment of Incomes During COVID-19 in SOUTHMOD Tax-benefit Microsimulation Models, WIDER Technical Note 2022/4, Helsinki: UNU-WIDER, 2022. https://doi.org/10.35188/UNU-WIDER/WTN/2022-4

With: Rodrigo Oliveira, Enrico Nichelatti, Pia Rattenhuber

Published in: UNU-WIDER Technical Note Series, 2021

Abstract: This note sets out two different methods on how to adjust incomes in the microdata underlying the standard SOUTHMOD models to reflect a sudden shock, in this case the COVID-19 shock, as done in the accompanying working paper by Lastunen et al. (2021). The note first describes how industry-specific GDP shocks are calculated. Next, it describes how these shocks are randomly allocated to individuals’ incomes in the microdata. Using the World Bank Phone Survey for Uganda, an alternative, regression-based method is described that models labour market transitions in a more detailed manner as it takes into account individuals’ characteristics. The method could easily be replicated for other countries provided such alternative microdata eventually become available. We further track and compare variables between the survey data underlying the UGAMOD input data, the 2016/17 Uganda National Household Survey, and the World Bank Phone Survey for Uganda.

Citation: Oliveira, R.C., Lastunen, J., Nichelatti, E. & Rattenhuber, P. Imputation Methods for Adjusting SOUTHMOD Input Data to Income Losses Due to the COVID-19 Crisis, WIDER Technical Note 2021/19, Helsinki: UNU-WIDER, 2021. https://doi.org/10.35188/UNU-WIDER/WTN/2021-19

With: Katrin Gasior, Helen Barnes, Maria Jouste, David McLennan, Michael Noble, Rodrigo Oliveira, Pia Rattenhuber, Gemma Wright

Published in: UNU-WIDER Technical Note Series, 2021

Abstract: This technical note presents a modelling approach used in Lastunen et al. (2021) where tax and benefit policies are scaled to reflect their actual duration during a single calendar year. It can be applied to tax-benefit microsimulation models implemented in the EUROMOD software. The method is particularly useful when evaluating the impact of discretionary policy measures adopted during the COVID-19 pandemic. Tax-benefit microsimulation models typically simulate policies at a specific point in time, which is problematic when considering changes in policies over time, for instance over the course of the coronavirus pandemic. Using the standard point-in-time approach, only those policies that were in place at the specific cut-off date (e.g. July 2020) would be considered and, even if short-lived in reality, assumed to be effective throughout the whole calendar year. The approach presented here applies ‘full-year adjustment’ to any policies implemented in 2020 that were in force for less than 12 months, ensuring that relevant benefit amounts and tax liabilities are scaled to reflect realistic payments during the year.

Citation: Gasior, K., Barnes, H., Jouste, M., Lastunen, J., McLennan, D., Noble, M., Oliveira, R.C., Rattenhuber, P. & Wright, G. Full-Year Adjustment for Modelling COVID-19 Policies in SOUTHMOD Tax-Benefit Microsimulation Models, WIDER Technical Note 2021/18, Helsinki: UNU-WIDER, 2021. https://doi.org/10.35188/UNU-WIDER/WTN/2021-18

Published in: UNU-WIDER Technical Note Series, 2021

Abstract: This note, which forms part of a series of technical notes that complement Lastunen et al. (2021), reports the approach used to derive shocks to household expenditures from shocks at the individual-level labour incomes. Its structure is composed of six different parts that describe the technique used for the calculations and include the respective mathematical formulas. Through the sequence of formulas, we manage to calculate household expenditures from shocks at the individual-level labour incomes by first distributing the expenditures of a given household among people within the same household. We then calculate the own-account adjusted expenditure. Subsequently, we obtain the final expenditure by deriving the share of labour income vis-a-vis the total original income for each person and multiplying it by the own-account adjusted expenditure. Lastly, we sum up shocked individual expenditures within each household to derive shocked expenditures at the household level.

Citation: Lastunen, J. Deriving Shocks to Household Consumption Expenditures from the Associated Income Shocks Resulting From COVID-19, WIDER Technical Note 2021/16. Helsinki: UNU-WIDER, 2021. https://doi.org/10.35188/UNU-WIDER/WTN/2021-16

With: Juliana Chen, Krishna B. Kumar, Shanthi Nataraj, Sarah Nowak, Carter Price

Report for: RAND Corporation, 2017

Abstract: This paper documents the MOBILE (Modeling Outcomes Based on Inequality in Labor Earnings) modeling framework developed by RAND. Income and wealth disparities within the United States are approaching levels not seen since the roaring 1920s, nine decades ago. While this issue has moved from the political fringes into the mainstream, the policy discussions have not always been grounded on solid evidence and analysis and have become mired in rhetoric. The policy solutions proposed for such disparities are typically the repurposed solutions to the economic maladies of previous cycles. This has created a role RAND is uniquely suited to fill given the broad and diverse skill sets available to study issues related to inequality. RAND has begun the development of the MOBILE model, which can serve as a vehicle for RAND to make a substantive, impactful, and persistent foray into the national discussion around economic disparities and possible policy responses. Fundamentally, the goal of MOBILE is to build a model that integrates childhood investments with labor market participation and outcomes, and can be used to understand the evolution of economic disparities, especially labor earnings, and the impact that various policies can have on such disparities. Such a model will be able to capture many aspects of a suggested policy in an objective way, without having to rely on opinions or ideologies. To that end, the team has developed a modeling framework that incorporates decisions made by key actors (workers, firms, government) and the relationships between these actors. We have developed both a static version of the model as well as a simple dynamic version that incorporates workers’ decisions about investment in human capital.

Citation: Chen, J., Kumar, K.B., Lastunen, J., Nataraj, S., Nowak, S. & Carter, P. Modeling Outcomes Based on Inequality in Labor Earnings (MOBILE): Model Overview and Policy Experiments, a report describing a general equilibrium model on the U.S. labor market, RAND Corporation, 2017.

Publisher: The National Academies of Sciences, Engineering and Medicine, 2017

Abstract: TRB's National Cooperative Highway Research Program (NCHRP) Research Report 845: Advancing Automated and Connected Vehicles: Policy and Planning Strategies for State and Local Transportation Agencies assesses policy and planning strategies at the state, regional, and local levels that could influence private-sector automated vehicle (AV) and connected vehicle (CV) choices to positively affect societal goals. The report aims to assist agencies with exploring actions that might increase the likelihood that AV and CV technologies will have beneficial impacts on traffic crashes, congestion, pollution, land development, and mobility (particularly for older adults, youths under the age of 16, and individuals with disabilities).

Citation: National Academies of Sciences, Engineering, and Medicine, Advancing Automated and Connected Vehicles: Policy and Planning Strategies for State and Local Transportation Agencies, Research Report 845, Washington, DC: The National Academies Press, 2017. https://doi.org/10.17226/24872

Publisher: OECD, 2017 

Abstract: This report discusses the mechanisms through which innovations based on information and communication technologies (ICT) may have effects on social inclusion. The report also assesses the dispersion of innovation performance across regions within countries. A core focus of the report is on exploring how innovation policies can contribute to inclusive growth and how they can be implemented efficiently. Moreover, the report discusses the role policies expanding access to higher education can play in supporting inclusive growth.

Citation: OECD, Making Innovation Benefit All: Policies for Inclusive Growth, OECD Publishing, Paris, 2017.