Tax and benefit microsimulation to tackle inequality in Colombia

Background

Colombia is one of the most unequal countries in the world. However, the tax-benefit system currently plays a very minor role in redistributing income. Tax-benefit policies reduce income inequality by around 3 percentage points (pp) in Colombia, compared to 21 pp on average for the EU. Moreover, the use of tax-benefit models to assess the redistributive role of existing and counterfactual policies is widespread in the developed world, whereas such tools are not publicly available for policy analysis in developing countries like Colombia.
Description
The aim of the project is to contribute to the use of tax-benefit microsimulation techniques in Colombia to improve evidence-based policy making in the country. It also seeks to build capacity and expertise in tax-benefit modelling with the final aim of advancing the scientific and policy debate around the rampant income inequality in the country.
The project consists of three main activities.

1. Capacity building. A group of researchers from the partner institution, Externado University of Colombia, has visited ISER to be trained on the use of EUROMOD and to discuss and share ideas about the use of COLMOD, the tax-benefit model for Colombia, for academic research and policy analysis.
2. Updating and improving the tax-benefit model for Colombia with the support from ISER researchers.
3. Organization of a workshop at Externado University in Colombia to present research based on tax-benefit microsimulation; and a training course on the use of COLMOD.

Outputs
The outputs of the project include the model, input dataset and model documentation, all of which are available at the model webpage: https://www.uexternado.edu.co/economia/colmod-el-primer-modelo-de-microsimulacion-en-colombia/

The webpage contains information about publications which make use of the model and links to the presentations of the workshop.