Development activities of the SustainWELL project
Model extensions implemented for the SustainWELL project aim at disaggregating the National Transfer Accounting (NTA) and National Time Transfer Accounting (NTTA) frameworks to the individual level, allowing the study of the sustainability and redistributive operations of welfare state regimes across population groups and cohorts.
Main completed and current activities
Re-basing microWELT and extension to 8 countries: The microWELT microsimulation model was re-based and extended to 8 countries. The starting year of microWELT was moved to 2018, and all parameters of the core were updated.
OpenM++ transition: OpenM++ is the platform-independent open-source successor of Modgen, the programming language used to implement microWELT and microDEMS. While openM++ is a re-implementation of the Modgen language, some code adaptations are required to meet modern (and stricter/safer) programming standards.
Ongoing improvements of the model core: The existing model core is continuously improved, many improvements being driven by the demands of Sustainwell, but also benefiting other projects.
Earning equations: Alongside the Sustainwell project, we added earnings implemented by Mincer-Wage Equations. Based on EU-SILC data, daily wages are calculated based on yearly gross wages and time spent in employment.
Longitudinal modeling of activity careers: We currently improved the model framework of microWELT by incorporating longitudinal consistent employment careers modelled in continuous time. Transitions between labour market states depend on a set of personal characteristics but also on the duration of the respective state. (-> Discussion Note Activity Careers)
Retirement decisions: Incorporation of longitudinal consistency requires the modelling of a definite retirement event. Retirement is also the subject of an Austrian case study (part of Sustainwell) comparing the results of the highly stylized microWELT approach with the detailed Austrian model microDEMS. (-> Working Paper Pension Reform)
Unemployment benefits: Longitudinal work careers implemented in MicroWELT distinguish spells of employment, unemployment, leave, out of labor force, and permanent retirement. The modelling of unemployment benefits is based on estimated replacement rates using the OECD tax benefit calculator. (-> Discussion Note Tax-Benefit)
Maternity and parental leave spells and replacement incomes: Take-up and spell durations are sampled from ditributional parameters. Regulations and replacement rates are identified from Euromod Country reports and the Euromod Hypothetical Household Tool.
Tax-benefit modelling based on synthetic database imputation: While earnings, public pensions, maternity and parental leave and unemployment benefits are modelled in microWELT, taxes and (other) benefits are simulated by database imputation, following a modified approach outlined in Van de Ven et.al. (2022). (-> Discussion Note Tax-Benefit)
Implementation of tax-benefit accounting: The continuous-time time framework of microWELT is reflected in the implementation of the accounting system which instantaneous updates whenever relevant characteristics such as employment status, income, or family compositions changes. At the end of each calendar year, or at death, adjustments can be made and results are finalized and stored.
MicroDEMS Case studies: The model was re-based for incorporating the most recent population projections. Two working papers were released. (-> Working Paper Pension Reform, -> Working Paper Population Heterogeneity)