A Top-Down Behaviour (TDB) Microsimulation Toolkit for Distributive Analysis

20 Pages Posted: 9 May 2018 Last revised: 12 Jul 2018

See all articles by Luca Tiberti

Luca Tiberti

Université Laval; Partnership for Economic Policy (PEP)

Martin Cicowiez

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

John Cockburn

Partnership for Economic Policy (PEP); Université Laval; Partnership for Economic Policy (PEP)

Date Written: August 1, 2017

Abstract

CGE models are often combined with microsimulation (MS) models to perform distributive impact analysis for fiscal or structural policies, or external shocks. This paper describes a user-friendly Stata-based toolkit to perform microsimulations combined with CGE models in a top-down fashion. The toolkit is organized in various modules. It first estimates income generation by type of work and skill of workers. Then it estimates households’ specific price deflators based on individual utility. The changes estimated by a CGE model (or from other sources) in the employment (by skill and sector), in the wage payroll (by skill), in the revenues from self-employment activities (by skill) as well as in the commodities prices are fed into the MS model in a consistent way. Once the new vector of real consumption or revenue is estimated, it performs a series of distributive analysis, such as the computation of standard poverty and inequality indices, their decomposition by income factor, robustness analysis and growth incidence curves, and compare the baseline with the simulation results. This makes it possible to run standard poverty and distributive analyses, and to see whether a given shock or policy has had some impact on household welfare and who are the most affected households. Based on such information, social protection policies can be accurately designed in order to minimise the, e.g., negative effects of a given shock in a cost-effective manner. An illustrative analysis is run on data from Uganda.

Keywords: CGE-microsimulation model, poverty and distributive analysis, Uganda

Suggested Citation

Tiberti, Luca and Cicowiez, Martin and Cockburn, John, A Top-Down Behaviour (TDB) Microsimulation Toolkit for Distributive Analysis (August 1, 2017). Partnership for Economic Policy Working Paper No. 2017-24. Available at SSRN: https://ssrn.com/abstract=3159366 or http://dx.doi.org/10.2139/ssrn.3159366

Luca Tiberti (Contact Author)

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada

Partnership for Economic Policy (PEP)

P.O. Box 30772-00100
ICIPE - Duduville Campus, Kasarani
Nairobi
Kenya

Martin Cicowiez

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) ( email )

Calle 6 e/47 y 48
La Plata, Provincia de Buenos Aires 1900
Argentina

John Cockburn

Partnership for Economic Policy (PEP) ( email )

P.O. Box 30772-00100
ICIPE - Duduville Campus, Kasarani
Nairobi
Kenya

Université Laval ( email )

Dept. of Economics
Québec, Quebec G1V 0A6
Canada

Partnership for Economic Policy (PEP) ( email )

Duduville Campus, Kasarani
P.O. Box 30772-00100
Nairobi
Kenya

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