How EUROMOD works

EUROMOD is a static microsimulation model. It applies user-defined tax and benefit policy rules to harmonised micro-data on individuals and households, calculates the effects of these rules on household income, and then outputs results – still at the micro level.

The effects of different policy scenarios can be analysed and compared in the user’s chosen statistical software. In addition, the user interface itself can output a range of summary statistics, including (changes to) risk-of-poverty and income inequality and the (net) budgetary cost of policy changes.

There are three key components to EUROMOD: the coded policy rules, the input micro-data and the software. The software – comprising a user interface and a calculation engine – allows for the adjustment of policy parameters and runs these user-defined tax-benefit routines, calculating the effects of policy changes on incomes in the micro-data.