Anti-Poverty Policy
This chapter discusses the development of a static microsimulation model for the purpose of undertaking an anti-poverty policy reform. Microsimulation models, which simulate the legislative detail of poverty-reduction instruments, can be used to make social-protection instruments more effective in this objective by helping to improve the targeting of these instruments. This chapter describes firstly the structure of the dataset required for microsimulation modelling. It then creates a theoretical understanding of the structure of social transfers, and of the concept of a hypothetical microsimulation model. Although the model developed in this chapter abstracts from the population complexity described in Chapter 1, it allows us in a simpler way to understand the targeting and structure of anti-poverty policies. Some of the issues that arise in creating a base dataset for a microsimulation model are discussed. As validation, debugging, and error checking are paramount in model development, the use of a hypothetical family model to use for validation purposes is introduced. We define some concepts used to calculate the poverty efficiency of a social-protection instrument. Finally, the chapter undertakes a simulation of the development of a means-tested benefit.