Piecewise Linear Budget Constraints for microsimulation models
Author grahamstark
0 Stars
Updated Last
2 Years Ago
Started In
May 2020

Piecewise Linear Budget Constraints

This package can be used to generate a complete two-dimensional budget constraint for some unit (person, benefit-unit, household, etc.) for some tax-benefit system. That is, a list points describing the combinations of net income that the unit would get for different values of gross income (or hours worked, wages, etc.). The package takes a user-defined calculator function, and identifies all the points of discontinuity to a high degree of accuracy, even if the system being modelled has large discontinuities (as is common in fiscal systems).

Here is a live example of this algorithm in action.

See: Duncan, Alan, and Graham Stark. [A Recursive Algorithm to Generate Piecewise Linear Budget Contraints, IFS Working Paper 2000/01 May 2, 2000] (https://doi.org/10.1920/wp.ifs.2000.0011).

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