Territorial inequality: an agent-based approach in modelling of social policy

Abstract

The article proposes a methodological approach for assessing the territorial inequality based on an agent-oriented spatial model. The main decisions are made in the model at the microeconomic level by households and enterprises with spatial coordinates. Then they are aggregated to the level of regions, industries and the economy as a whole. The evaluation of the indicators according to the criterion of social justice is carried out using two groups of methods: firstly, statistical, primarily the Gini coefficients (which are based on the households’ incomes in regions or country as a whole), and secondly, methods for constructing isoelastic social welfare functions at the national and regional or zonal levels, which are based on the households’ utility functions and include the inequality rejection coefficient. Each value of the coefficient corresponds to a certain concept of social justice. This second group of methods is related to the original approach of the author. The model simulates the development of the government social policy, which is carried out by changing taxes and transfers and taking into account the degree of territorial inequality. Model calculations consider pensions and five types of monetary transfers in a fixed structure: unemployment benefits, child benefits, poverty benefits, social aid and basic income benefits. In a series of experiments, the effect on territorial inequality of changes in the total value of social transfers (with their fixed structure) and tax rates in accordance with the proportionality coefficients was assessed. It is used as a toolkit for changing the system of taxes and transfers and for supporting social policy to reduce spatial inequalities in Russia.

Keywords

• territorial inequality
• social policy
• agent-based model
• social welfare function