ESPASIM
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EspaSim is a static microsimulation model of taxes and benefits for Spain. Taking into account the information provided by micro-data from a representative sample of Spanish individuals and households, EspaSim simulates the effects that different tax-benefit policy scenarios would have on the income of this population. When given the characteristics of each individual in addition to income and expenditure, EspaSim calculates the tax payable and the benefits that a person would receive under alternative tax policy systems.
EspaSim is a user-friendly program, accessible to anyone familiar with the Spanish tax-benefit system and with basic computer knowledge. Since it is static, calculations are made without taking into consideration any reaction brought about by policy change on the behaviour of the agents. It involves purely arithmetical calculations which show the impact shortly or immediately after a reform, before the agents adjust their behaviour as a result of the policy change.
The development of EspaSim has been parallel to the construction of EUROMOD, a European Tax-Benefit model.[1]
Result
Typical Model Applications:
Calculation of the impact that a specific policy will have on disposable income. More particularly the effects on tax collection, inequality and poverty, effective marginal tax rates, replacement rates and simplicity of the following policy instruments:
- Employee/Employer Social Security Contributions reform
- Income tax reform (including tax schedule, tax allowances, tax credits, income tax-withholdings, tax unit)
- Integrated tax-benefit reform
- Value Added Tax (VAT) reform
- Pensions and Insurance Benefits reform (the model does not enable the user to simulate entitlement to these benefits but it does give the option of eliminating them.)
- Supplementary minimum pensions of the Insurance System reform
- Unemployment Assistance Benefits reform
- Non-Contributive or Assistance Benefits (including non-contributory or assistance benefits we find old-age and child benefits)
- The establishment of Income guarantee programs in Spain.[1]
EspaSim is structured as follows:
(1) The program reads the micro-data (the user can choose the database and can re-scale income variables).
(2) The user defines the policy scenario by altering parameters. EspaSim simulates the following policies (the user can move throughout different screens that correspond to different policy instruments and parameters):
- Employee social security contributions (General, Agriculture, Self-Employment, Unemployment, Part-time Employment, Training and Public Service)
- Income taxes
- Value added tax (for 17 expenditure types)
- Pensions and insurance benefits
- Supplementary minimum pensions of the insurance system
- Unemployment assistance benefits
- Non-contributive or assistance benefits
- Minimum income guarantee programs
- Universal child benefit programs
- Basic income/lineal tax rate.
(3) Executing the simulation: The user selects the reform he/she wants to analyse and a baseline scenario.
(4) EspaSim drafts a General Report (for aggregates such as social security contributions, income tax, VAT revenue).
(5) EspaSim drafts a series of specific reports on the distributive impact and the incentives of the system policies proposed by the user.[1]
Dynamic structure:
- Static. Impacts on annual incomes.
Main Model Results:
- Aggregates such as social security contributions, income tax and VAT revenue etc.
- Distributive impacts of policies: Lorenz Curve (Gini Index), percentage of winners and losers, average gain and loss by deciles of income per adult equivalent
- Micro-level change in household income
- Effective Marginal Tax Rate for the subpopulation of individuals receiving income from work.
Required technical infrastructure:
EspaSim has been constructed with Visual Basic 6.0 and works on PCs with Windows95 (or later versions) as user interface.[1]
Structure of Input Data:
Two databases are used which are representative of the Spanish population as a whole and contain detailed information on the income, housing and other demographic, social and economic characteristics of the individuals and households included in the sample:
- Encuesta de Presupuestos Familiares, Household Budget Survey (EPF), 1990-91
- The Panel de Hogares de la Unión Europea, Spanish sample of the European Community Household Panel (ECHP)
Data are updated using more than 30 specific updating indices (from National Accounts, employment legislation or CPI).
Expenditure variables have been updated using a calibration procedure.
Model Extensions:
EspaSim Difusión V.1. (freely available in Spanish and Catalan on the web allows the use of the model in a restricted way using as a baseline policy scenario year 2001 by means of the 3rd wave of the ECHP)
EspaSim Research is currently being updated according to our research needs.
Regional Scope:
Spain[1]
See also
References
Levy, H. / Mercader-Prats, M. / Planas, M. (2001), An Introduction to EspaSim: A Microsimulation Model to Assess Tax-Benefit Reforms in Spain, Brazilian Electronic Journal of Economics, No. 1, Vol. 4 (Look at the page here).