LOTTE-Skatt is the main model of the LOTTE system, with long traditions as a key tool for decision makers. The model provides estimates of distributional and revenue effects of changes in the direct taxation of individuals in Norway. Results according to new proposed tax systems can be contrasted to a baseline system. Output from LOTTE-Skatt is individual tax burdens, post-tax income, etc, that can be used for further analysis. Total tax revenue is also tabulated. Simulations are done without any use of behavior.
The model is based on data from the Household Income Survey. The input data is projected from base year to simulation year before it is used for simulation, normally 3 years difference. Main users are The Ministry of Finance and the political parties of the Norwegian Parliament. Documentation of the model can be found in Arneberg (1995) (in Norwegian).
Users Guide of LOTTE-Skatt (in Norwegian) can be found here: Bård Lian: Brukerveiledning for Lotte
Description of the latest input and output data for LOTTE-Skatt (In Norwegian) can be found here: Kirsten Hansen: Kodelister for 2003-grunnlaget
For an applied tax analysis that uses the model extensively, see Thoresen (2004).
It is possible to make constructed households whose tax burdens are simulated in LOTTE-Skatt. Tables for the year 2006 is available here in Norwegian. Table of taxes; table of disposable income; Users Guide in Norwegian: Bård Lian: En kort innføring i Lotte-Typehushold
LOTTE-Konsum has the same micropopulation as LOTTE-Skatt and LOTTE-Arbeid, and takes level and changes in post tax income for each individual in these models as a starting point. Individual incomes are summed to household income, and consumption relations are specified at the household level. LOTTE-Konsum determines savings, total consumption expenditure, expenditures on detailed commodity groups, price index, and standard of living for each household in the population. The standard of living is defined as the household total consumption expenditure divided by the household specific price index and number of consumer units, which can be interpreted as a money metric utility. The microsimulation model can be used in combination with connected macro models. More detailed information of the model and its applications can be found here.
At Statistics Norway we have over the years developed substantial knowledge and experience on labor supply estimation for simulation purposes. This is now currently exploited to establish a module to estimate labor supply effects of tax changes: an estimated labor supply model for wage earners in combination with LOTTE-Skatt. The labor supply modeling framework is based on Dagsvik (1994): Discrete and Continuous Choice, Max-Stable Processes, and Independence from Irrelevant Attributes, Econometrica 62, 1179–1205, and the empirical results are discussed in Dagsvik and Jia (2006)
For an earlier study that employs LOTTE-Skatt in combination with an estimated labor supply model for female wage earners, see Kornstad and Thoresen (2004): Means-Testing the Child Benefit, Review of Income and Wealth 50, 29–49.