Organization
description
Transcript of Organization
Exploring the potential of microsimulation for the study of poverty, health, and social
security in the developing world. The MicroHGC model
IMA 2011
Martin Spielauer (IIASA)Landis MacKellar (IIASA)
Organization
- Context- The MicroHGC Model
- General outline- Implementation
- Illustrative results- Life course income- Distribution of returns- Pension income & poverty
- Conclusions & Discussion
Context
- Technical Assistance project of the Asian Development Bank: introduction of the New Pension System (NPS) in India
- Examples from:Landis MacKellar, Martin Spielauer (forthcoming 2011) NPS and the Individual Saver: a Microsimulation Analysis. In: Implementing Pension Reforms for Financial Inclusion: Policy Issues and Options for India; Asian Development Bank
- MicroHGC: generic version, developed at IIASA- Tool for research & capacity building- MS for study of poverty, health & social security
Context
- Developing world setting- Less detailed data- Fundamental policy choices - High inequality (no mean/representative agent)
- MS complementing stylized macro accounting models- Adding flexibility & distributions; reproducing macro- Transparent, simple to understand and operate
- Evolvement of project:- actuarial macro model- Idea to add calculations for some “typical cases”- Cases, cohorts, population..- … reproduction of macro model with added information
Context – Indian NPS
- The NPS is a version of the public sector pension plan for “unorganized sector” = 89% of population
- Voluntary, minimum contribution of 500Rs (10$) / month- Enhanced investment choices (investment strategy & 6
funds)- Non-withdrawable- EET tax regime: contribution & accrued earnings exempt,
Taxable at withdrawal (ongoing discussion)- Low fees compared to existing private plans
- 2$PPP/day poverty line; 1.25US$ nominal = 60Rs- Median male work income ~3000 Rs/month (60US$)
Model – General Outline
Behaviour Macro Micro
Fertility UN projection, urban / rural
# births + list of typical familiesOpen population, case based
Mortality Urban / rural, 1% decrease per year
identical
Migration 1% rural -> urban identical
LMP scenarios + duration in state
Wages Average, fixed growth scenarios
+ distribution: log-normal Gini 0.36+ mobility
Sickness, disability Scenarios
Pension saving Fixed % + boundary condition: 2$PPP, minimum contribution 500Rs, normal & max saving rate
NPS Fixed interest,Stylized fees, enrolment scenarios, annuitized at 60
+ Detailed fee structure+ Rule-based enrolment+ inheritance
Model – Implementation
- Implemented in the generic microsimulation language Modgen developed and maintained at Statistics Canada
Illustration: Life course income, 1992 cohort
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Age
Life-Course Income and Pension by Type for the 1992 Birth Cohort; Male, 6th Earning Decile
Household pension income
Existence Minimum
Household income net of NPS contributions
Individual pension income
Illustration: Life course income, 2002 cohort
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Rs.
Age
Life-Course Income and Pension by Type for the 2002 Birth Cohort; Male, 6th Earning Decile
Household pension income
Existence Minimum
Household income net of NPS contributions
Individual pension income
Illustration: Distribution of IRR, 1992 cohort
0.0%
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1st D
ecile
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Female . Male . All
IRR
Perc
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f pop
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onIRR of Pension Savings by Initial Income Decile, 1992 Birth Cohort:
Never enough income to join plan
All savings consumed up by fees
Negative IRR
Positive IRR
Average positive IRR
Illustration: Pensions by earning deciles
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Female Male
Real
(201
0) R
s.
Average individual Pensions by Initial Earning Decile and Year of Birth
1st Decile
2nd Decile
3rd Decile
4th Decile
5th Decile
6th Decile
7th Decile
8th Decile
9th Decile
10th Decile
All
Illustration: Pensions and poverty
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. Male
Population age 65 with Household Pension Income above Poverty Line by Initial Income Decile and Year of Birth
1st Decile
2nd Decile
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4th Decile
5th Decile
6th Decile
7th Decile
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All
Illustration: Pensions and health expenditures
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Population age 65 with Household Pension Income above Poverty Line by Initial Income Decile and Year of Birth: Base vs. Health Expenditure Scenario
Illustration: Pensions and fees
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Population age 65 with Household Pension Income above Poverty Line by Initial Income Decile and Year of Birth: Base vs. No Fees Scenario
1. Decile, Base cenario
1. Decile, No Fees Scenario
Conclusions
- Application side- Illustration of limits of private saving for old age income
security- Enhancements
- Education- Generic tool, capacity building
- Questions concerning microsimulation:- Do such simple stylized models make sense (or leave
this type of modeling to macro community?)- Are developing countries a good application area of
microsimulation- Best strategy for improving MS models for this type of
application?