Social policy in a multi-regional agent-based model

In the modern scientific and technological development, the role of the welfare state and the importance of solving the problem of inequality as a manifestation of social injustice is increasing. The purpose of the work is to develop a spatial agent-based model (ABM) in the direction of a detailed representation of social transfers block and the study of the economic agents’ behavior in response to the changes of the state’s social policy parameters. The isoelastic function of social welfare (FSW), which is based on the households’ utility functions with correction factors reflecting the degree of social insecurity, is used to include ethical considerations in the economic analysis and formalize the goals for social justice. The novelty of the work is associated with the study of the dependence on different variants of the benefits structure, taking into account the agents’ heterogeneity. The proposed ABM takes into account five main types of monetary transfers: pensions, unemployment benefits, child benefits, poverty benefits, and other social transfers. In addition, the experimental calculations consider two additional social benefits: the proportional transfer and basic income. The experimental calculations results show that social benefits are quite successfully integrated into the original ABM, and the main effects of these benefits are fully manifested in it. The relative characteristics of individual benefits differ significantly from the point of view of certain concepts of social justice and the corresponding changes in the FSW. By the example of the ratio of child benefit to the poverty benefit, it is shown that the effect in terms of the FSW at high levels of inequality rejection is achieved only through the complex use of transfers.