ETMOD – simulating tax and benefit policies for development in Ethiopia
The ETMOD model is freely accessible for non-commercial research use. You may request access to the model here.
ETMOD, the tax-benefit microsimulation model for Ethiopia is a highly versatile yet easy to use tool for policymakers and researchers alike. It allows the user to analyse and compare the effects of different tax-benefit policy scenarios on poverty, inequality, and government revenues. The model applies user-defined tax and benefit policy rules to micro-data on individuals and households and calculates the effects of these rules on household income.
With ETMOD, users can simulate reforms of the Ethiopian tax and benefit system. They can estimate, for example, the number of beneficiaries and analyse the characteristics of the prospective recipients of a hypothetical benefit. ETMOD also allows users to implement hypothetical income tax and social security reforms and calculate their effects on inequality and the government budget. Existing policies or past policy reforms can be evaluated as well.
ETMOD can answer questions such as:
- Are the beneficiaries of a particular policy or policy reform more likely to live in urban or rural areas?
- Do they work in the formal or informal sector?
- How much would such a policy cost?
- Could specific taxes be increased to offset the additional expenditures on social protection without large reductions in living standards?
Possible policy reform simulations that could be analysed using ETMOD include for example:
- a universal safety net (PSNP for urban households)
- a universal pension for the elderly
However, the model allows the simulation of a multitude of other policy reforms as well.
ETMOD has been developed in cooperation with the Ethiopian Development Research Institute (EDRI), the EUROMOD team at the Institute for Social and Economic Research (ISER) at the University of Essex, and KU Leuven. The current ETMOD national team consists of two local consultants and a professor from the University of Piemonte Orientale. The latest available version of ETMOD is based on three waves of the Ethiopia Socioeconomic Survey (ESS): 2013-14, 2015-16 and 2019-20. These data allow for representative results at the national and to a certain extent at the sub-national level. Policies are simulated for the years 2014-22.
ETMOD was launched in Addis Ababa in July 2017 when the first training course also took place. The participants included over 30 government officials and researchers from Ethiopia. The second and third training courses were organized in Addis Ababa in October 2022 and May 2023.