Analysis of the Changes in the Hungarian Tax System and Social Transfers between 2010 and 2014 Using a Behavioural Microsimulation Model

Gergely Baksay and Balázs Csomós
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Gergely Baksay: Hungarian National Bank
Balázs Csomós: Hungarian National Bank

Society and Economy, 2015, vol. 37, issue supplement, 29-64

Abstract: Using an updated microsimulation model developed earlier in the Hungarian National Bank, we estimate the macroeconomic, budgetary and labour market effects of government measures relating to taxes, social contributions, social transfers and gross wages since 2010. Compared to other studies, we take into account a more broad scope of measures, e.g. measures affecting gross wages and total labour cost directly. According to our estimations, the increase of the minimum wage and the so-called expected wage have fully compensated the low-income households of 2.3 million people already in the short-run for the loss of net income stemming from personal income tax and social contribution changes (especially for the abolition of tax credit).Taking into account social transfer reforms, the long-term macroeconomic effect of the measures is favourable: the level of employment may increase by approximately 2 percent, steady-state GDP level may go up by 1.5–2 and public deficit may decrease in the long run due to the government measures.

Keywords: behavioural microsimulation; linked micro macro model; tax system; transfers (search for similar items in EconPapers)
JEL-codes: H22 H23 H31 (search for similar items in EconPapers)
Date: 2015
Note: The authors express their thanks to Péter Benczúr, Gábor Kátay, Gábor Kiss, Benedek Nobilis and András Svraka. The authors are responsible for every error that remained in the study.
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