Frequent Questions

What are tax-benefit microsimulation models?

Microsimulation models combine representative household data with rules for taxes and benefits (transfers and social security contributions). They allow to analyse at the individual level and at the aggregate level (households, government, firms) how these rules and their possible changes control the welfare of society. Especially the effects on poverty, inequality and public finances.

Why are microsimulations important?

They are a fundamental tool to reduce the misinformation that usually surrounds economic reforms, since it allows us to see the effect that policies have on income distribution, poverty, and public finances. The technique allows us to overcome the difficulties that the diversity and representativeness of the population present in macroeconomic analyses, since by focusing on individuals it allows us to understand the complexity of politics, its details, and interactions.

What is EUROMOD?

EUROMOD is the European Union’s tax-benefit microsimulation model. It is implemented in a homonymous software that allows to easily simulate the effects that changes in taxes and transfers have on the distribution of income and tax collection.

In addition to 28 European countries, 6 countries in Africa and 6 in Latin America, including Colombia, have models implemented in the EUROMOD language, this enables comparative studies between developed and developing countries and the search for better public policies.