A TAX-BENEFIT MICROSIMULATION MODEL FOR BULGARIA: OPPORTUNITIES FOR CROSS-COUNTRY SOCIO-ECONOMIC ANALYSIS USING EUROMOD

Venelin Boshnakov, Ekaterina Tosheva, Iva Taseva

Abstract: This paper aims to provide an introduction for experts in the field with benefits of the European model EUROMOD - microsimulation tax-benefit model within the framework of which there is a developed model for Bulgaria. Tax-benefit microsimulation is rarely used for policy analysis and design in Bulgaria because until recently no such reliable model existed. This has now been made possible with the use of EUROMOD which is a unique resource for national and comparative research. The different stages of its construction are described in the model: preparing the input micro-data utilised by the model; social security simulation; compensations tax and social insurance; validation of the results. Some possible applications of the model are demonstrated with examples of analyses at European level in a comparative plan. The usefulness of simulation analyses is evaluated in the field of distribution and redistribution of income inequality, poverty and incentives to work. Outlined are the main prospects for the future development and use of EUROMOD for the purposes of socio-economic analysis and the development of tax-transfer policies in Bulgaria.

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Date published: 2015-01-14