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Application of microsimulation models in the analysis of taxes and social benefits in Croatia (AMMATSBC)

Background

Tax-benefit microsimulation models allow the ex ante review of the effects of changes in a tax-benefit system. They are particularly valuable in policy reform analysis and planning. Unlike in other EU countries, where the use of such models is widespread, their development in Croatia is still in its infancy.

The purpose of this project is to apply microsimulation models of Croatian taxes and benefits in public policy and academic analysis. The project attempts to demonstrate their effectiveness to public administrators and academic researchers in Croatia.

Objectives

The research project has three objectives:

(1) Develop the microsimulation model of Croatian taxes and benefits – miCROmod – a conventional static arithmetic model that simulates social security contributions, personal income tax, guaranteed minimum income, child benefit, parental benefits and unemployment benefit. miCROmod is the core around which several supplemental models will be developed, providing additional functions, and will include (a) a local government supplement, modelling taxes and benefits in the City of Zagreb and (b) a behavioural supplement, simulating the impact of changes of tax-benefit instruments on the labour supply and gross wages.

(2) Employ miCROmod and EUROMOD in the analyses of tax-benefit reform scenarios. miCROmod and EUROMOD (a comprehensive tax-benefit model for the EU) will be used in the analyses of current issues in the Croatian tax-benefit system. These analyses will provide insight into the effect of a number of tax-benefit reforms on income inequality, poverty rates and incentives to work. The following reform scenarios will be simulated: (a) Child benefits reform, (b) Personal income tax reform (c) In-work policies in Croatia, and (d) Local social benefits.

(3) Present the performance of miCROmod and EUROMOD to administrators and researchers.

Project website

http://www.ijf.hr/eng/research/croatian-science-foundation-projects/1053/ammatsbc/1062/

Team members

Slavko Bezeredi

Researcher - Institute of Public Finance, Zagreb


Dr Saša Jakšić

- Institute of Public Finance, Zagreb


Dr Chrysa Leventi

Senior Research Officer - ISER - University of Essex


Martina Pezer

Researcher - Institute of Public Finance, Zagreb


Professor Holly Sutherland

Research Professor and Director of EUROMOD - ISER - University of Essex


Ivica Urban

Researcher - Institute of Public Finance, Zagreb


Zagreb credit jorge franganillo flickr

Photo credit: Jorge Franganillo