Economics - Research Publications

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    Accounting for population ageing in tax microsimulation modelling by survey reweighting
    Cai, L. ; Creedy, J. ; Kalb, G. R. ( 2005-03)
    This paper investigates the use of sample reweighting in a behavioural taxmicrosimulation model, to examine the implications for government taxes andexpenditure of population ageing in Australia. First, a calibration approach to samplereweighting is described, producing new weights which achieve specified populationtotals for selected variables, subject to the constraint that there are minimal adjustmentsto the weights. Second, the performance of the Australian Bureau of Statistics’ (ABS)weights provided with the 2001 Survey of Income and Housing Cost (SIHC) wasexamined and it was found that reweighting does not improve the simulation outcomesfor the 2001 situation, so the original ABS weights were retained for 2001. Third, theimplications of changes in the age distribution of the population were examined, basedon population projections to 2050. A ‘pure’ change in the age distribution wasexamined by keeping the aggregate population size fixed and changing only the relativefrequencies in different age-gender groups. Finally, the effects of a policy change tobenefit taper rates in Australia were compared for 2001 and 2050 population weights. Itis suggested that this type of exercise provides an insight into the implications ofchanges in the population on government income tax revenue and social securityexpenditure, indicating likely pressures for policy changes.