Micro-simulation and Normative Policy Evaluation: an Application to some EU Tax-Benefits System.

In this work we explore the impact of alternative tax-benefits systems on household welfare. The framework of our analysis is the theory of optimal taxation with the distribution of potential wages replaced by the distribution of household abilities. The latter has been calculated by inversion of the household’s utility maximisation problem. This methodology has been then implemented in order to compare the tax-benefits systems of France and UK. We have employed a behavioural micro-simulation model that has been applied on samples extract from the "Households Budget Survey 1989" of INSEE and from the "Family Expenditure Survey" of ONS.