What is EUROMOD?

EUROMOD is the tax-benefit microsimulation model for the European Union that enables researchers and policy analysts to calculate, in a comparable manner, the effects of taxes and benefits on household incomes and work incentives for the population of each country and for the EU as a whole. Cross-country comparability is enabled by coding the policy systems of the EU Member States according to a common framework based on a standard set of modelling conventions. The EUROMOD platform is highly flexible but also organised, documented, validated and transparent. Underpinning the model is the purpose-built software comprising a user-friendly interface, supplemented by extended functionalities (plugins and add-ons) for special purpose analysis. The software is used in many country-specific models around the world.

Originally maintained, developed and managed by the Institute for Social and Economic Research (ISER) of the University of Essex, since 2021 EUROMOD is maintained, developed and managed by the Joint Research Centre (JRC) of the European Commission, in collaboration with Eurostat and national teams from the EU countries. The model is open source since December 2020 (before December 2020 it was open access), with an increasing number of users across Europe and beyond. There are now several hundred active users from a range of institutional backgrounds, helping bridge the gap between academic research and policymaking.

EUROMOD is widely used in policy-relevant research, including within academic disciplines from public economics to comparative social policy.

Key strengths of the model include:

• The only multi-country tax-benefit model available for the EU
• The only accessible model for many individual EU countries
• Harmonised input data and policy simulations for all countries
• Intuitive user interface and special-purpose modelling language
• Extensive library of policies, continually updated and developed
• Adaptable to other data sources (e.g. administrative data)

EUROMOD can be linked to, or used alongside, other types of models, such as behavioural, labour supply/demand, macro-economic or environmental. Also, the model's flexibility means that it can be adapted to shortcut the process of building tax-benefit models with potentially comparable outputs for any country.

EUROMOD is a static microsimulation model. It applies user-defined tax and benefit policy rules to harmonised microdata, calculates the effects of these rules on household income, and then outputs results.

There are three key components to EUROMOD: the coded policy rules, the input microdata and the software. The default policy rules are those set to 30 June for a given policy year. The microdata, mainly based on EU-SILC, are processed according to a standard set of protocols. The software may then be used to adjust the policy parameters and run new tax-benefit routines, calculating the effects of these changes. It includes EUROMOD statistics, with which the effects of different policy scenarios can be analysed and compared in terms of budgetary and distributional impact. 

EUROMOD aims to simulate as much as possible of the tax and benefit components of household disposable income. Generally, the following instruments are simulated: 

• Income taxes
• Social insurance contributions (paid by employees, self-employed and employers) 
• Family, housing, social assistance and other income-related benefits

Since 2024, consumption taxes are also simulated in all countries. The simulation's methodology, jointly developed by JRC, KU Leuven, University of Essex and Praxis Center for Policy Studies, operates within the EUROMOD spine. It expands the model's input dataset, introduces a new policy module, and enhances the EUROMOD Statistics. It allows for different behavioural assumptions in tax reform simulations, including constant income shares, expenditure shares and quantities. More information about the tool is available here. 

For a fuller description of the model, see also the paper EUROMOD: The European Union Tax-Benefit Microsimulation Model.

EUROMOD can be used in many different ways in different contexts. Examples include:

• Estimation of redistributive effects of actual and hypothetical tax-benefit policies
• Estimation of budgetary effects of policy changes
• Policy swapping analysis
• Estimation of work incentives and labour supply effects of policies
• Stress tests of tax-benefit systems
• Design of EU-wide policy reforms
• ‘Nowcasting’ and forecasting of the income distribution under policy/population change scenarios

A number of special purpose tools and extensions have been built for EUROMOD. An overview of them can be found in the Extended functionalities section.

EUROMOD was originally developed for the countries of the EU-15 as part of a series of European Commission funded (FP3, FP4 and FP5) research projects, starting in 1996.

In 2005-2008 a FP6 Research Infrastructure Design Study (I-CUE “Improving the Capacity and Usability of EUROMOD”) provided the basis to extend the model to incorporate the 2004 accession countries and make it easier to update, maintain and use. Since then EUROMOD’s updating and development has been supported by funding from DG-Employment’s European Union Programme for Employment and Social Security (PROGRESS) and, from 2016, via the European Union Programme for Employment and Social Innovation (EaSI). EUROMOD now covers all EU Member States.

Starting in 2004 EUROMOD was managed, maintained and developed by the Institute for Social and Economic Research (ISER) at the University of Essex in collaboration with national teams in each EU member state. In 2018, a phased transition process started, in which the responsibility for the regular updating and maintenance of EUROMOD was progressively transferred to the Fiscal Policy Analysis Team of the JRC. During that period Directorate-General Joint Research Centre (DG JRC) gradually assumed the responsibility for the model maintenance and update with Directorate-General Eurostat (DG ESTAT) acting as main data provider. Directorate-General for Employment, social affairs and inclusion (DG EMPL), together with Directorate-General for Economic and Financial Affairs (DG ECFIN), Directorate-General for Taxation and Customs Union (DG TAXUD) and Directorate-General for Structural Reform Support (DG REFORM) (hereafter partner DGs), agreed to co-finance the transfer process and its longer-term development and maintenance. The transition process finalised at the end of 2020.

Since 2021 EUROMOD is managed, maintained and developed by the Joint Research Centre (JRC) - European Commission. The model is continuously updated in collaboration with Eurostat and national teams from each EU member state, making use of microdata from the European Union Statistics on Income and Living Conditions (EU-SILC).