EUROMOD: Enabling the European Commission and national governments to simulate the effects of policy change
Submitting InstitutionUniversity of Essex
Unit of AssessmentEconomics and Econometrics
Summary Impact TypePolitical
Research Subject Area(s)
Economics: Applied Economics
Studies In Human Society: Policy and Administration
Summary of the impact
EUROMOD, a tax-benefit microsimulation model developed at Essex, has been
used by the European Commission and various national administrations to
improve the evidence base for policymaking. EUROMOD enables the
measurement of potential effects of policy changes on government budgets,
income distribution, and work incentives in the EU. It is used by the
European Commission to inform policymaking and model the outcome of
austerity measures. At a national level it has been used by the Greek
Government to assess the potential impact of various austerity policies,
and the Austrian Government to assist in monitoring the effect of policies
on meeting poverty reduction targets and to allow the public to understand
the impact of policy changes. EUROMOD has also been adapted for use
outside the EU and spin-offs have been developed in Serbia and South
Africa that are used to model the outcomes of potential policy
EUROMOD is co-ordinated, maintained, developed and disseminated by
researchers at Essex's Institute for Social and Economic Research, under
the direction of Professor Holly Sutherland (at Essex 2004 to present). A
first version was initiated in 1998 and since relocating to Essex it has
been re-constructed, extended from 15 to 28 countries, and is now
regularly updated with the latest microdata and policy information.
EUROMOD is the tax-benefit microsimulation model for the EU28 member
states, based on household microdata from Eurostat's European Union
Statistics on Income and Living Conditions. It provides consistent and
comparable cross-country analysis of the effects of tax-benefit policies
and policy reforms on national budgets, the distribution of household
incomes, and work incentives. It is used to evaluate the effectiveness of
current policies, to explore the implications of change to policies or
economic conditions, and to design new policies with particular goals.
Results may be evaluated for individual countries on their own or in
comparison with each other, for the EU as a whole, or any sub-group of
countries, such as the Eurozone.
EUROMOD was constructed and is maintained and kept up-to-date by bringing
together an appreciation of the analytical demands of a range of academic
disciplines (e.g. public economics, comparative social policy, social
statistics), drawing on state-of-the-art technical expertise (e.g. data
analysis and management, software design and development) and a network of
28 national teams and many stakeholders. EUROMOD is not only a tool for
carrying out research on policy-relevant topics, but it can also be
applied to address particular questions of current interest to
policymakers, either at EU or national level. Bridging academic enquiry
and the analytical needs of policymakers it brings the two communities
closer, especially as analysis using EUROMOD becomes increasingly
recognised and respected in each of them.
EUROMOD is unique in two respects: covering many countries and being
generally accessible to all not-for-profit researchers. It is also
designed to maximise flexibility and does not restrict the user to a fixed
range of options but at the same time does not require specialised skills
to use it. All these attributes mean that it can be straightforwardly
adapted for use in any country with suitable microdata, and national
components can be developed and elaborated as stand-alone projects.
EUROMOD offers a short-cut for any national administration or other
policy-focused body to build its own model. Research using EUROMOD has
demonstrated how such models enhance the evidence base for policymaking
and encourages the adoption of such techniques.
In particular, recent dramatic changes due to the financial and economic
crises have posed challenges for public policies affecting personal
incomes. Publications by Essex researchers using EUROMOD have explored the
implications of unemployment for household incomes, the distributional
effects of austerity measures, and the design of new sources of public
revenues and of social protection systems able to meet new demands.
Comparing across countries provides new perspectives and allows for mutual
policy learning. The need to make short-term predictions of the effect of
recent and current changes on poverty and income distribution, in the
absence of timely micro-data, is an analytical challenge that is being met
using EUROMOD to "nowcast" income distribution, focusing on countries
experiencing the most unstable economic conditions.
The EUROMOD team at Essex also includes: Silvia Avram, Senior Research
Officer (joined Feb 2011); Mariña Fernandez Salgado, Research Assistant
(Nov 2010 - Jul 2012); Francesco Figari, Research Fellow (Aug 2006 - Nov
2010); Maria Iacovou, Senior Research Fellow; Chrysa Leventi, Senior
Research Officer (joined June 2013); Horacio Levy, Research Fellow (Mar
2011 - Oct 2012); Jekaterina Navicke, Senior Research Officer (joined Feb
2012); Alari Paulus, Research Fellow (joined Jul 2006); Olga Rastrigina,
Senior Research Officer (joined Feb 2012); Alexandra Skew, Senior Research
Officer (Feb 2009 - Apr 2012); Alberto Tumino, Senior Research Officer
(joined Oct 2009).
References to the research
On the development of EUROMOD
Lelkes, O. and H. Sutherland (eds.) (2009) Tax and benefit policies
in the enlarged Europe: Assessing the impact with microsimulation models.
Farnham: Ashgate. ISBN 9780754678489
Figari, F., M. Iacovou, A. Skew and H. Sutherland (2012) Approximations
to the truth: comparing survey and microsimulation approaches to measuring
income for social indicators. Social Indicators Research, 105 (3):
387-407. DOI: 10.1007/s11205-010-9775-4
On the application of EUROMOD
Fernandez Salgado, M., F. Figari, H. Sutherland and A. Tumino (2013)
Welfare compensation for unemployment in the Great Recession. Review
of Income and Wealth. DOI: 10.1111/roiw.12035
Avram, S., F. Figari, C. Leventi, H. Levy, J. Navicke, M. Matsaganis, E.
Militaru, A. Paulus, O. Rastrigina and H. Sutherland (2013) The
distributional effects of fiscal consolidation in nine EU countries.
EUROMOD Working Paper EM2/13 Colchester: ISER, University of Essex.
Grants awarded to Holly Sutherland
Improving the Capacity & Usability of EUROMOD (I-CUE) European
Commission, 01.05.05 to 30.04.08, £448,381.
EUROMOD — Year 1. European Commission, 01.02.09 to 31.01.10,
EUROMOD — Year 2. European Commission, 01.02.10 to 31.01.11,
EUROMOD — Year 3. European Commission, 01.02.11 to 31.01.12,
EUROMOD — Year 4. European Commission, 01.02.12 to 31.01.13,
EUROMOD — Year 5. European Commission, 01.02.13 to 31.01.14,
Details of the impact
EUROMOD has an impact at EU-level through informing analysis and policy
formation within the European Commission. It has been used by various
national governments within the EU, including those of Greece and Austria.
EUROMOD spin-offs have been developed for use outside the EU — these
include SAMOD (South Africa) and SRMOD (Serbia).
1. EU policy
The European Commission's Directorate-General for Employment, Social
Affairs & Inclusion (DG-EMPL) makes extensive use of EUROMOD in policy
formation and has stated that EUROMOD "provides comparative information of
the highest available statistical standard in the EU, which is only
scarcely available from other sources. This makes Euromod a particularly
useful tool for analysis and policy formulation at the EU level"
[corroborating source 1]. DG-EMPL has confirmed that "Euromod outputs...
regularly feed into the analytical reports published by the European
Commission, such as the EU Employment and Social Situation Quarterly
Review or the annual flagship Employment and Social Developments in Europe
Review... These reports provide analytical underpinning for the policy
formulation by the European Commission in the employment and social
fields" . For example, the Annual Report on Employment and Social
Development (2012) cites EUROMOD in numerous places, including a
number of explicit references to Essex research [corroborating source 2].
Much of the DG-EMPL's use of EUROMOD has involved modelling the effects
of austerity measures, and it has confirmed that "Euromod data are used to
support the analysis of consolidation packages implemented in a number of
Member States, which in turn underpins Commission policy recommendations
to the Member States" . For instance, the EU Employment and Social
Situation Quarterly Review of March 2013 models fiscal consolidation
using EUROMOD, while that of December 2011 uses EUROMOD to model outcomes
of austerity measures .
Sutherland has presented EUROMOD findings at DG-EMPL events and she was
invited to present the paper that compares distributional effects in six
countries at the European Commission conference on Inequalities in
Europe and the Future of the Welfare State (December 2011) . In
November 2012 DG-EMPL held the Microsimulation for Policymaking in
Times of Crisis conference, which included an opening presentation
by Sutherland and a further talk on nowcasting from Essex researchers —
both of which are available on the DG-EMPL's website . A recent DG-EMPL
working paper includes an analysis of nowcasting poverty using EUROMOD and
draws on Navicke et al. (2013) . DG-EMPL has confirmed that "the
on-going EUROMOD work on nowcasting provides valuable and timely
information on the most probable recent trends in the distribution of
incomes and particularly in the share of population at risk of poverty"
2. National-level impact within the EU
EUROMOD has been used in the design of new policies in Greece between
2011 and 2013. The model provides simulations of the likely and
distributional effects of various alternative policies, which are either
adopted or abandoned as a result. Although these simulations are not
publically available, the Chairman of the Greek Government's Council and
of Economic Advisors has informed us of four specific impacts: (i) a new
real estate tax has been introduced, which is linked with the cadastral
value of the dwelling and other variables that are mostly available in the
EUROMOD data base (this tax was introduced in Law 4021/2011 and updated in
Law 4152/2013); (ii) "radical change" in the design of family benefits —
tax allowances have been abolished and the benefits have become
income-related (these changes came into force through Law 4093/2012 and
Law 4110/2013); (iii) progressive cuts have been applied to the sum of
pensions received by individual pensioners — until recently Greece had no
register of pensioners, only pensions (this change was introduced in Law
4110/2013); (iv) the decision to introduce means testing to disability
benefits was abandoned due to EUROMOD simulations, which showed that the
cost incurred would outweigh the potential benefit .
The Austrian Federal Ministry of Labour, Social Affairs and Consumer
Protection (bmask) has used EUROMOD in two ways as part of a project in
which Essex is an official partner . Firstly, the Social Reform
Microsimulation was designed in order to help Austria meet
poverty-reduction targets in line with the "Europe 2020 strategy". This
reduced version of EUROMOD was introduced in January 2013 to assess the
effects of policy change in particular "impact dimensions". Secondly, this
simplified version of EUROMOD allows the public to assess the potential
impact of policy changes. This can be done through a web portal that all
Austrians can use — registration is required but the service is provided
free of charge. Bmask has stated that "without the existing EUROMOD model
it would not have been possible to offer an instrument for the
quantitative impact assessment of the Europe 2020 target group within the
Austrian impact assessment system at reasonable cost" . The ultimate
impact of this work with bmask is not yet known, but the impact to date is
that a national government is relying on EUROMOD to develop strategies to
reduce poverty and to help the public better understand policy change.
3. Impact outside the EU
EUROMOD has been adapted for use outside of the EU. For instance, a team
in Serbia (with Essex as a partner) developed the SRMOD microsimulation,
which has been used in the development of the Law on Social Protection
(Official Gazette of the Republic of Serbia, No. 24/2011) . The World
Bank office in Belgrade asked the SRMOD team to make the ex-ante analysis
of the distributional and poverty effects of the draft law. The World Bank
then used the results of this analysis as the basis for recommendations
for improvement of the draft law. Some of these recommendations were then
included in the final version of the law . A further example is in
South Africa where the SAMOD microsimulation has been developed by the
South African government and a team at the University of Oxford's Centre
for the Analysis of South African Social Policy, with Essex having joint
ownership and Sutherland acting as an advisor . To date, six projects
have been commissioned by the Department of Social Development, Office of
the Presidency, and Statistics South Africa. A member of the Oxford team
has confirmed that "SAMOD is thus having a direct impact on policy
development within Government, particularly on policy development planning
within the Department of Social Development" .
Sources to corroborate the impact
All documents are available from HEI on request.
 Official, Directorate-General for Employment, Social Affairs and
 Directorate-General for Employment, Social Affairs and Inclusion
(2012) Employment and social developments in Europe 2012.
Brussels: European Commission. See pp. 39, 225, 256-269.
 European Commission (2012) The EU Employment and Social Situation
Quarterly Review, December 2011. See pp. 59-63.
European Commission (2013) The EU Employment and Social Situation
Quarterly Review, March 2013. See pp. 42-45.
 Programme from conference on Inequalities in Europe and the
Future of the Welfare State.
 Website and programme for the Microsimulation for Policymaking in
Times of Crisis conference:
 Directorate-General for Employment, Social Affairs and Inclusion
(2013) Social protection budgets in the crisis in the EU, Social Europe.
Working Paper 1/2013
 Chairman of Council of Economic Advisors in Greece.
 Link to homepage of the Social Reform Microsimulation. The
"Information about the microsimulation model" acknowledges Essex as a
partner in the project. See pp. 7 & 9. Link:
 Head of Department: Principle Social Policy Affairs and Research
(Dep. V/B/4), Austrian Federal Ministry of Labour, Social Affairs and
 Teaching Assistant in Faculty of Economics and member of SRMOD team,
University of Belgrade.
 Information on SAMOD from University of Oxford's Centre for the
Analysis of South African Social Policy website: http://www.casasp.ox.ac.uk/microsim.html
 Deputy Director of Centre for the Analysis of South African Social
Policy, University of Oxford.