EUROMOD Microsimulation

EUROMOD is unique in being a research tool that is relevant not only at national level and as an integrated tool for European comparative social science research, but also as a model of the EU as a whole. EUROMOD brings a distinctive economic research on the redistributive effects of tax-benefit policies across Europe.

The JRC has developed an interaction of EUROMOD with the DG ECFIN model QUEST in close collaboration with DG ECFIN and ZEW-Mannheim (see Barrios et al., 2016). Published JRC research includes analyses of in-work tax expenditures for low income workers (see Barrios et al., 2015) and contributions to the Commission Tax reforms in the EU Member States report (see European Commission 2014, 2015). EUROMOD is also used in combination with the GEM-E3 model to analyse the distributional impact of green taxes. EUROMOD provides also the micro-parameters needed to run the EDGE-M3 model.

The model has increasingly been used by the Commission services over the past few years. DG EMPL uses results from the model for its Quarterly and Annual reports on Employment and Social Developments in Europe (European Commission 2018) and different research notes delivered in the context of the Social Situation Monitor are based on EUROMOD. EUROMOD based simulations are also used by DG ECFIN in the Report on Public Finances in EMU (European Commission 2017). EUROMOD is also used by ESTAT for the production of the flash estimates on income and poverty: https://ec.europa.eu/eurostat/web/experimental-statistics/income-inequality-and-poverty-indicators. Improved timeliness in the data production and the flash estimates using EUROMOD are part of a two-pillar strategy in order to ensure more recent data for income indicators for policy making. The use of the EUROMOD model for the provision of near-real time information on income indicators is therefore critical in the context of the European Semester. The JRC uses the model in cooperation with policy DGs, in particular DG ECFIN, DG TAXUD, DG EMPL and the SRSS. Since 2015 the JRC contributes to the preparation of the Country reports for the European Semester and produces regular notes also circulated in other policy DGs (the so-called “In-depth analyses of tax reforms using the EUROMOD model”). These notes were extensively used in the Country reports of the European Semester. EUROMOD has also been used for the Social Impact Assessment of the third Greek Stabilisation programme in cooperation with DG EMPL and DG REFORM for the assessment of the reform of the personal income system in Greece in 2015 and 2016. EUROMOD has also been used to provide technical assistance to the Greek Ministry of Finance (2018-2021) and it is currently being used for technical support to Romania, Lithuania and Slovakia (since 2020).

Work with DG TAXUD extended the model to improve the coverage of wealth taxation and for future analyses of tax shifting between corporate income taxes and personal income taxes. The model has been extended to account for labour supply adjustment combining EUROMOD and an econometrically estimated labour supply model. This extension covers all the EU Member States. The JRC is also currently extending the model to cover consumption taxation (VAT and excises). The model provided also input to a study on the fiscal impact of migration (2020) in cooperation with IIASA.

The JRC has developed a "simplified" version of EUROMOD, based on a web interface, which can be accessed upon request by researchers and policy analysts.

EUROMOD has been used extensively to assess, among others, the extent to which policy responses to the COVID-19 crisis in Member States have cushioned household incomes losses during the pandemic. The Commission Staff Working Documents analysing the recovery and resilience plans of several Member States (June 2021) cite this work.