Redistribution over the Lifetime in the Irish Tax-Benefit System - An Application of a Prototype Dynamic Microsimulation Model for Ireland

This paper examines the distribution of lifetime income in Ireland. To do this a new prototype dynamic microsimulation model for Ireland is used to generate lifetime income streams. Aggregating over the lifetime we can assess the distribution of lifetime income and the degree of redistribution in the tax-benefit system. In addition to the effect of taxes and benefits, we decompose lifetime income into its components and examine the impact of different life-cycle patterns.

Employment Transitions in 13 European Countries. Levels, Distributions and Determining Factors of Net Replacement Rates

This paper utilises a multi-country microsimulation tax-benefit model for Europe, EUROMOD, to simulate the distribution of net replacement rates for 13 European countries. We look at different types of labour market transitions by comparing household incomes in the current state with simulated in-work/out-of-work counterfactuals. In particular we compare how the importance of household composition and different income sources varies across countries and for different replacement rate bands. We also show which individual and household characteristics are associated with observed replacement rate levels.net replacement rate, unemployment benefits, work incentives European Union, microsimulation

The Life-cycle Impact of Alternative Higher Education Finance Systems in Ireland

With increasing numbers of young people participating in higher education in Ireland and a heavy reliance of higher education institutions on State funding, the introduction of an alternative finance system for Ireland has been muted over the past number of years. However, no study has been conducted to gauge the potential impact of such measures. In this paper we utilise a dynamic microsimulation model developed for Ireland to simulate the impact of both an income contingent loan system (ICL) and a graduate tax system from a fiscal and redistributional viewpoint and to analyse the repayment length under the former system. Our results suggest that an ICL system could be more equitable, while the graduate tax system could be a better alternative from a fiscal viewpoint. The results also illustrate the importance of the interest rate attached to any future student loan system within Ireland from a fiscal viewpoint

Case Study: Global economic crisis and poverty in Pakistan

In this case study we adopt a macro-micro framework in order to evaluate the impact of the current global crisis on the Pakistan economy. We use a ‘top-down’ approach to combine a static computable general equilibrium model with a microsimulation model. Our results suggest that between 2007 and 2009 the poverty headcount ratio is likely to have increased by almost 80 percent, from 22 to 40 percentage points. However, our results also show that this increase is attributable in part to the fuel and food crisis that preceded the financial crisis. Our results also indicate a differential impact, with wage increases for farm workers and a decrease in wages for skilled labour.CGE; micro-macro; global economic crisis; Pakistan

Shaping Earnings Mobility: Policy and Institutional Factors

This paper explores the role of labour market policy and institutional factors in explaining cross-national differences in earnings mobility across Europe in the 1990s using the European Community Household Panel and OECD data on institutional variables. More regulation in both labour and product markets emerge as sources of labour market rigidity, being positively associated with earnings immobility and exacerbating the adverse effects of macro-economic shocks on earnings mobility. Unionization is found to promote earnings mobility, effect, however, counteracted in periods with adverse macroeconomic shocks. Corporatism is found to promote mobility and to counteract the adverse effects of macroeconomic shocks on earnings mobility. The generosity of the unemployment benefit is found to limit the adverse effects of macroeconomic shocks on earnings mobility.Wage Distribution, Inequality, Earnings Mobility, Labour Market Institutions; Labour Market Policies

Simulating Migration In The Pensim2 Dynamic Microsimulation Model

Modelling migration is fundamentally important to maintaining the appropriate population structure in a dynamic microsimulation model. It is particularly important as it is faster changing than other demographic processes such as fertility and mortality and so can impact upon the structure of the population quickly. In this paper we review methods that have been used by other models and describe the choices and methods used in the Pensim2 dynamic microsimulation model. In particular we model immigration flows, emigration flows and the overseas population. We divide our method into modelling how many migrate using external macro data and who emigrates, based upon micro processes.Migration, Dynamic Microsimulation

The Welfare Impact of Price Changes on Household Welfare and Inequality 1999-2011

peer-reviewedThis paper attempts to use applied micro-economic research to understand the impact of price changes over the period 1999-2011 in Ireland. This measure combines an efficiency component using a Linear Expenditure System (LES) and an equity component using the Atkinson Index of Inequality. The efficiency component includes the behavioural response to price changes for non-subsistence expenditures thereby producing a Cost of Living Index. The Atkinson Index of Inequality produces an inequality measure and this is combined with the Cost of Living Index to produce an overall welfare measure. This extends upon the existing Irish literature on this issue by accounting for this broader set of components. The results show that changes in the cost of living have differed substantially between households both in terms of demographics and the position of the household in the income distribution and that behavioural response can potentially improve the welfare position of households in response to price changes in most years

The Gender Gap in Income and the COVID-19 Pandemic in Ireland

The gender income gap is large and well documented in many countries. Recent research shows that it is mainly driven by differences in working patterns between men and women but also by wage differences. The tax-benefit system cushions the gender income gap by redistributing it between men and women. The COVID-19 pandemic has resulted in unprecedented levels of unemployment in 2020 in many countries, with some suggestions that men and women have been differently affected. This research investigated the effect of the COVID-19 pandemic on the gender gap in income in Ireland. By using nowcasting techniques and microsimulation, we modeled the effect of pandemic-induced employment and wage changes on the market and disposable income. We showed how the pandemic and the associated tax-benefit support could be expected to change the income gap between men and women. Policy conclusions were drawn about future redistribution between men and women

Pursuing Added Value in the Irish Agri‐Food Sector: An Application of the Global Value Chain Methodology

In 2015, under its Food Wise 2025 strategy, the Irish government set itself the ambitious target of increasing Ireland’sincome from agri‐food exports to €19 billion within ten years, an 85 per cent increase. This paper analyses the structureof the two main food systems in Ireland; the dairy and beef industries, to examine value chain efficiencies in productionneeded to achieve such a level of growth. This paper, lays bare a reality characterised by significant inefficiencies andsuggests innovations to increase the competitiveness of the industries internationally. Moreover, the paper recognisesthat the ability of stakeholders to add value to primary products in the two main Irish food systems is key to the successof the Food Wise strategy.The methodology that the paper employs to analyse the dynamics of the Irish dairy and beef systems is the GlobalValue Chain (GVC) methodology championed and developed by the Center on Globalization, Governance &Competitiveness at Duke University. Through the disaggregation of the various segments that comprise the foodsystems, the GVC methodology allows for a multidimensional analysis, and for the identification of whererationalisation is required and where value may be added to primary products. The paper presents value chain mapsfor both the Irish dairy and beef systems to compare and contrast the structures, institutions, characteristics andeffectiveness of the two value chains. The comparison illustrates cogently where rationalisation is needed and wherevalue may be added.The paper finds that the Irish dairy system is more fragmented than the systems of other dairy‐producing countries andthat at the farm and processing levels it still requires, despite much rationalisation since the 1980s, substantialconsolidation may still be necessary.Regarding where value may be added to primary products, the paper finds that in the Irish dairy system there remainsan over‐reliance on basic commodity sales and that innovation to open up entirely new markets, both in terms ofproducts, such as in the area of sports nutrition, and geographically, such as middle‐eastern markets, with whitecheese, is required. Regarding the Irish beef system it finds that while there is not as much scope for productdiversification, innovation in branding and standardisation could produce a considerable dividend.Comparing value chain integration, the institutional structure built upon farmer owned cooperatives in the dairy sectorallows for greater coordination and responsiveness to market opportunities. The beef value chain however is much lessintegrated, beset by cross‐value chain competition and low levels of trust, which has implications for future valuegeneration and transformation across the chain

Developing a microsimulation model for farm forestry planting decisions

peer-reviewedThere is increasing pressure in Europe to convert land from agriculture to forestry which would enable the sequestration of additional carbon, thereby mitigating agricultural greenhouse gas production. However, there is little or no information available on the drivers of the land use change decision from agriculture to forestry at individual farm level, which is complicated by the inter-temporal nature of the decision.This paper describes a static microsimulation approach which provides a better understanding of the life-cycle relativity of forestry and agricultural incomes, using Ireland as a casestudy. The microsimulation methodology allows for the generation of actual and counterfactual forest and agricultural income streams and for other attributes of utility such as long-term wealth and leisure, for the first time. These attributes are then modelled using purpose built forest models and farm microdata from a 30 year longitudinal dataset. The results show the importance of financial drivers but additionally show that wealth and leisure are also important factors in this inter-temporal land use change decision. By facilitating the examination of the distribution of farms across the farming population, the use of a static microsimulation approach allows us to make a considerable contribution to the literature in relation to the underlying drivers of farm afforestation behaviour. In the broader context of Climate Smart Agriculture and the Grand Challenges facing the intensification of agricultural production, these findings have implications for policies that seek to optimize natural resource use