eu-progress project midlas 2013-2015 kick-off meeting gijs dekkers federal planning bureau,
DESCRIPTION
Recent Developments in Dynamic Microsimulation Modeling for Policy Support: an application to Belgium. EU-PROGRESS Project MiDLAS 2013-2015 Kick-off Meeting Gijs Dekkers Federal Planning Bureau, CESO, K U Leuven And CEPS/INSTEAD Raphaël Desmet Federal Planning Bureau. - PowerPoint PPT PresentationTRANSCRIPT
plan.be
EU-PROGRESS Project MiDLAS
2013-2015Kick-off Meeting
Gijs DekkersFederal Planning Bureau,
CESO, K U LeuvenAnd CEPS/INSTEAD
Raphaël DesmetFederal Planning Bureau
Recent Developments in Dynamic Microsimulation Modeling for Policy
Support: an application to Belgium
plan.be
1. Microsimulation? What microsimulation?2. The interdependence of adequacy and sustainability3. A long-standing collaboration process, cumulating in…4. … LIAM25. The microsimulation model MIDAS : ready to tango6. An application: what is the impact of recent pension
reform on the prospective development of the AROP in Belgium?
7. Conclusions
Recent Developments in Dynamic Microsimulation modeling for policy support
plan.be
• The essential function of (dynamic/static) microsimulation models...
...is the imputation of (prospective/alternative) microdata
Microsimulation, what microsimulation?
ni
plan.be
A classfication of microsimulation models
Longitudinal ageing
Cross-sectional ageing
Dynamic ageing
Microsimulation models
Static Dynamic
Static ageing
plan.be
• Microsimulation is now recognized as a valuable tool in research and policy assessment in various parts of the world
• Scientific research on and with microsimulation is increasingly popularIMA, IJM
• Static ageing is the most popular in both applied and academic research, though dynamic-ageing models are and remain the more popular
• Alignment is an accepted range of methods ensuring complementarity between macro-models and dynamic micro-models
• Multi-country models or frameworksEUROMOD, UNU-WIDER, MIDASGenesis, LIAM2, ModGen
Recent developments in microsimulation
plan.be
• May 2005-May 2008: Research project AIM; 6th framework programme of the European Commission. FPB (Belgium), DIW (Germany), ISAE (Italy):
first-generation MIDAS, using LIAM• December 1st, 2009 – November, 30th 2011.
PROGRESS project MiDaLFPB (Belgium), CEPS/INSTEAD, and IGSS, Luxembourg.
The preparation of administrative data in Luxembourg and the development of LIAM2 by the FPB
• January 1st, 2010 – August, 31th 2010. Convention Redis. FPB (Belgium), CEPS/INSTEAD, and IGSS, Luxembourg.
First-generation prospective model for Luxembourg, based on MIDAS_BE and using LIAM
A long-standing collaboration process, cumulating in…
plan.be
• Tool for the development of dynamic microsimulation models with dynamic cross-sectional ageing.
• ≠ a microsimulation model (<> Midas)• Simulation framework that allows for comprehensive
modelling and various simulation techniques• Prospective / Retrospective simulation• Work in progress …• You get it for free!
LIAM2
plan.be
A simple simulation file in LIAM2
plan.be
• Stochastic simulation• Deterministic changes• functions• Modelling on multiple object levels• Links between objects of various levels• Proportional alignment, including hard and soft take
and leave conditions• Alignment over muliple levels (a.k.a Chenard’s
algorithm)• The creation, removal and cloning of objects• Parameters, arrays, macro’s• Importing models in other models• Output handling• Extensive debugging possibilities
But of course, LIAM2 can do much more…
plan.be
LIAM2 bundled in Notepadmodel/YAML
Interactive console
plan.be
• LIAM2 is currently used for dynamic microsimulation in various countriesBelgium, Hungary, Japan, NZL, Luxembourg, UK, France, the Netherlands
• And various subjectsPensions, health care, taxes and contributions, demographics
Other informationStarting dataset of 300K persons Starting dataset of 2,200K personsTotal runtime (2002 – 2060): 28 minutes 2 seconds18746 individuals/s/period on average top 5 processes:1. output_process: 13m 26s (48%)2. family_allowances: 1m 59s (7%)3. matching_process: 1m 30s (5%)4. welfare: 1m 26s (5%)5. inwork_process_working_t-1: 49s (3%)Peak memory use: 811MB
Total runtime (2002 – 2060): 3 hours 3 minutes 55 seconds18280 individuals/s/period on average top 5 processes:1. output_process: 1hr 22m 2s (45%)2. family_allowances: 13m 1s (7%)3. matching_process: 12m 28s (7%)4. welfare: 9m 36s (5%)5. inwork_process_working_t-1: 4m 40s (3%)Peak memory use: 4.4GB
Table 1: performance of MIDAS_BE using LIAM2 - simulation run from 2002 to 2060.
plan.be
• The dynamic microsimulation model MIDASan acronym for ‘Microsimulation for the Development of Adequacy and Sustainability’
- Based on a sample of administrative data
In Belgium, LIAM2 is being used for the development of
plan.be
• The dynamic microsimulation model MIDASan acronym for ‘Microsimulation for the Development of Adequacy and Sustainability’
• Starting dataset: individuals, grouped in households(survey, administrative data)
• Individuals pass through all stages of life: birth, marriage, divorce, children, widowhood,death
• Individuals find a job, lose it, become eligible to a social security benefit (or not), build up a pension...
• Individuals enter into retirement and receive a pension benefit based on their previous career
• MIDAS simulates: pensions, unemployment, disability schemes, welfare, gross-net trajectory.
MIDAS: an overview
plan.be
A key characteristic of MIDAS is its consistency with the semi-aggregate model MALTESE
‘Channels of consistency’ of MIDAS with MALTESE
1. State alignment2. Monetary alignment3. Joint social hypotheses
MALTESE(macro)
MIDAS(micro)
plan.be
The MALTESE macro-budgetary model
Social expenditures or budgetary cost of ageing
Average benefitsNumber of beneficiaries
Macroeconomic projection
Public sub-sectors accounts, public debt
Health care expenditure (acute and long-term)
Population projection by age and gender
Socio-economic breakdown by age (groups) and gender
Social expenditures by branch
plan.be
The microsimulation model MIDAS : ready to dance
Alignment of state variables: Procedure to have the model respect or ‘mimic’ exogenous aggregates
while respecting individual probabilities in the occurrence of the event– Behavioral equation determining the probability of the transition– Individuals are ranked depending on the obtained probability (from the
highest to the lowest)– The number of selected individuals reproduces targeted aggregates
– Mortality, fertility, employment, unemployment, self-employment, public sector employment, civil servants, disabled, CELS beneficiaries
Monetary alignment or ‘amount alignment’:Proportional adjustment of first-run values of earnings to match
exogenous macroeconomic productivity growth ratesUprating
Of social security benefits
plan.be
EU- PROGRESS Project MIDLAS
Kick-off MeetingLuxembourg, September 23,
2013Raphaël Desmet
Federal Planning Bureau,
Joint work with GIJS DEKKERS, NICOLE FASQUELLE and SASKIA WEEMAES
The social and budgetary impacts of recent social
security reform in Belgium
plan.be
1. The pension system in Belgium
2. Recent social security reform in Belgium
3. Budgetary impact of social security reform
4. Social impact of social security reform
5. Conclusions
The social and budgetary impacts of recent social security reform in Belgium
plan.be
• Three pillars
• Separate PAYG schemes for employees in the private and public sectors and self-employed.
• Earnings related scheme with redistributive elements (ceiling, minima, maxima, minimum right per career year, assimilated periods, …)
• Means-tested old-age guaranteed minimum income (GRAPA)
• Official retirement age is 65, but retirement is possible from 60 on (62 after reform)
The pension system in Belgium
plan.be
• Eligibility conditions for early retirement:
- Age condition gradually increases from 60 to 62 in 2016
- Career condition gradually increases from 35 to 40 years in 2015
• Adaptation of the rules for calculating the benefit
- Some assimilated periods of unemployment and early-retirement are now valued at the minimum right per career year
- The early-retirement penalty for self-employed is reduced and abandoned for those of 63 and older, or who have a long career.
- The pension benefit of civil servants is now based on the last 10 years of the career
Pension reform
plan.be
• UnemploymentIncreased digression of unemployment
- 1st period: compensation rate slightly increases- 2nd period: duration limited for cohabiting with
dependants and singles and reduced for cohabiting
- 3rd period: minimum benefit for cohabiting with dependants and singles and lump sum benefit for cohabitingAge condition for seniority supplement:
- 50 to 55 years old, with a career of minimum 20 years
• Conventional Early Leavers’ Scheme (CELS)Career condition increases from 35 to 40 yearsPart-time CELS abandoned
Unemployment/Conventional Early Leavers’ scheme
plan.be
Table 4 Budgetary costs of ageing: base scenario of the Study Committee of Ageing (with reform) and impact of the reforms (difference between projection with and without reform), October 2012% of GDP
Budgetary impacts of social security reform
Components of the budgetary costs
Base scenario (with reforms) Impact of reforms2011 2030 2060 2011-2060 2011-2030 2011-
2060Pensions 9.9 13.6 14.5 4.6 -0.2 -0.1- wage-earners 5.4 7.6 7.8 2.5 -0.2 -0.1- self-employed 0.8 1.0 1.1 0.3 0.0 0.0- civil servants 3.7 5.0 5.6 1.8 -0.1 0.1Health Carea 8.0 9.4 11.0 3.0 0.0 0.0Disability schemes 1.6 1.6 1.5 -0.1 0.0 0.0Unemploymentb 2.0 1.3 1.1 -0.9 -0.1 -0.1CELS/UCA 0.4 0.3 0.3 -0.2 -0.1 -0.1Children benefits 1.6 1.6 1.4 -0.2 0.0 0.0Other social expenditures 1.7 1.7 1.6 -0.1 0.0 0.0Total 25.3 29.5 31.4 6.1 -0.5 -0.3
Source: High Council of Finance, Study Committee of Ageing, Yearly Report 2012a. Public expenditure, inclusive long-term care.b. Inclusive time credit and career breaks
plan.be
Risk of poverty rate of retirees, in percent
Social Impacts of reform
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
2052
2054
2056
2058
2060
0
5
10
15
20
25
With reform Without reform
plan.be
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
2052
2054
2056
2058
2060
0
5
10
15
20
25
Male - with reform Female - with reform Male - without reform Female - without reform
Figure 3 : Risk of poverty rate of retirees by gender – Comparison between a scenario with structural reforms and a scenario without structural reforms, in percent
Risk of poverty rate of retirees by gender, in percent
Social Impacts of reform
plan.be
-0.02
-0.01
-1.04083408558608E-17
0.00999999999999999
0.02
0.03
Men Women
-0.02
-0.01
-1.04083408558608E-17
0.00999999999999999
0.02
0.03
Men Women
Development of the average net retirement benefits of pensioners, by gender (on the left) and of the average net equivalent income of pensioners, by gender
(on the right), %
Social Impacts of reform
plan.be
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
2053
2056
2059
0
5
10
15
20
25
30
35
40
45
50
With unemployment reform Without unemployment reform 2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
2053
2056
2059
0
5
10
15
20
25
30
35
40
45
50
With unemployment reform Without unemployment reform
Risk of poverty rate of unemployed computed at 70% of the equivalent income, by gender (men on the left and women on the right)
Social Impacts of reform
plan.be
Conclusions1. This paper assesses the sustainability and adequacy
impact of recent social security reform in Belgium
2. Microsimulation model aligned on a macro budgetary model
3. As a result of this reform, the budgetary costs of ageing are reduced by 0.3%-point GDP, evenly distributed between pensions, unemployment and CELS/UCA.
4. The risk of poverty of pensioners decreases as a result of the reform. This effect is faster for men than for women
5. The poverty risk for (male!) unemployed increases considerably