This research paper investigates the distributional impact of a recently introduced measure called the ‘Additional COLA for Vulnerable Household Mechanism’ in the budget for 2023. In order to analyse the effect of this measure on the income distribution and the at-risk-of-poverty rate EUROMOD, which is a tax-benefit micro-simulation model, is used. The findings outlined in this paper, demonstrates that the introduction of this measure leads to a reduction in the poverty rates among all segments of the population. Additionally, it improves income distribution across the population, indicating a decrease in income inequality.
