UKMOD is a freely accessible, open-source tax-benefit microsimulation model for the UK.
Millions of individuals, families and households are affected by government decisions on tax and benefits. Models such as UKMOD help researchers understand how changes in taxes and cash benefits may affect the distribution of disposable income and public spending and revenues in the short run. Specifically, UKMOD enables researchers to compare the current policy system with counterfactual policy systems, to explore proposed policy reforms or alternative policy ideas. For example, UKMOD can model the introduction of a tax or benefit or see the effects of amending existing tax/benefit parameters.
The standard version of UKMOD is based on the Family Resource Survey (FRS), an annual cross-sectional survey of the living standards and circumstances of people living in the UK. The new version of UKMOD can now be run using Understanding Society data. When running policy simulations, users have an option of running UKMOD either with the FRS dataset or with the UKHLS dataset.
How to access and use UKMOD
You can find out more about Accessing UKMOD on the UKMOD website. Please note that the UKMOD UKHLS input data is only available as a Special Licence dataset.
Access Understanding Society: UKMOD Input Data, 2010-2019, Special Licence Access
Using UKMOD to enhance Understanding Society
UKMOD can be used to enhance Understanding Society by improving the accuracy of income measures at the bottom of the income distribution, by simulating entitlement to means-tested benefits according to the statutory rules. It can also be used to simulate benefit entitlement and tax liability at the individual level, whenever information is available only at the household/benefit unit level in the survey.
The tool can also be used to measure fiscal / tax advantages that are not directly observed in Understanding Society, such as tax allowances or tax credits. Finally, UKMOD can be used to produce harmonised outputs based on UKHLS and FRS, and cross-validate estimates based on different sources.
Expanding the scope of analyses conducted using UKMOD
The Understanding Society based version of UKMOD also expands the analyses that can be conducted. The new dataset allows researchers to analyse the effects of taxes and benefits on life course domains not covered in detail in the FRS data, such as employment history, partnership history, private transfers, health, and well-being.
The UKHLS version can also analyse the tax-benefits system and policy reforms among immigrant and ethnic minority groups, well represented in the UKHLS thanks to boost samples. As a longitudinal study, Understanding Society supports research requiring longitudinal data, such as studies of longitudinal inequality, persistent poverty, inter-generational redistribution, income dynamics and social mobility.
Read more about the UKMOD UKHLS input data in this CeMPA Working Paper.
