ProjectSOUTHMOD – simulating tax and benefit policies for development
This event will introduce policy makers, researchers, and practitioners to ETMOD, a new tax-benefit microsimulation programme, which has been developed under the UNU-WIDER SOUTHMOD project, in collaboration with Ethiopian Development Research Institute (EDRI), University of Essex, and Department of economics at the University of Leuven.
Tax-benefit microsimulation models — which combine representative household-level data on incomes and expenditures and detailed coding of tax and benefit legislation — have proven to be an extremely useful tool for policy makers and researchers alike. The models apply user-defined tax and benefit policy rules to micro-data on individuals and households and calculate the effects of these rules on household income. The effects of different policy scenarios on poverty, inequality, and government revenues can be analysed and compared.
Ethiopia, like other developing countries, is now building up its social protection system and the financing of public spending will need to be increasingly based on domestic tax revenues. In this process, understanding the system-wide impacts of different policy choices is critically important, and tax-benefit microsimulation models are very well suited for this purpose.