1. InGRID winter school in ‘Cross country microsimulation’ Day 1
Miko Tammik, Andrea Papini, Kostas Manios
& Diego Collado
ISER, University of Essex
21-23 November 2018
Course based on EUROMOD v. H1.0+

2. Outline: Day 1 Morning (10:00-13:15 with a break at 11:30)
Tax Benefit Microsimulation and EUROMOD
Model Design
The EUROMOD User Interface(UI)
Running EUROMOD
Statistics Presenter tool
Error handling Documentation
Afternoon (14:15-17:15 with a break at 15:45)
Hands-on practice: Exercise 1
EUROMOD functions and parameters
Hands-on practice: Exercise 2

3. Outline: Day 2 Morning (9:30-12:30 with a break at 11:00) Income lists
EUROMOD Functions and Parameters (cont.)
Hands-on practice: Exercise 3
Afternoon (14:00-17:00 with a break at 15:30)
Hands-on practice: Exercises 4 & 5
Hands-on practice: Exercise 6

4. Outline: Day 3 Morning (9:30-12:30 with a break at 11:00)
Assessment (tax) units in EUROMOD
Hands-on practice: Exercise 7
Afternoon (14:00-17:00 with a break at 15:30)
Hands-on practice: Exercises 8 & 9
Presentations by participants
Using EUROMOD after the course
Q&A

5. Tax-benefit microsimulation and EUROMOD

6. Microsimulation
Micro: technique using units (ex: individuals, households, firms etc.) instead of aggregate information
Tax-benefit models: household microdata
Simulation: application of an intervention that may change the state or behaviour of units
Tax benefit models: tax and benefit rules  determine entitlements & liabilities
Contribution: estimates results derived from the application of these rules on each unit.
Tax benefit models: impact on disposable income

7. Why tax-benefit microsimulation?
Population diversity and frequency
Policy complexity: detail and interactions
Source: Euromod using EU-SILC 2004

8. What makes EUROMOD special?
Multi-country tax-benefit model for the European Union: unique
Harmonised data and simulations
Very flexible structure (but scope depends on data available)
Tax-benefit modelling language: universal
Library of policies

9. What can EUROMOD do?
Simulate previous, current, future and “potential” tax-benefit rules
Distributive analysis
Budgetary effects
Indicators of work incentives
Complex policy reforms (e.g. revenue-neutral)
Policy swapping
Counterfactual (“what if”) scenarios (e.g. stress test)
EU-wide policy reforms
Tax evasion and non-take-up simulation/calibration (special data )
Input in other analyses (ex: labour supply models; links with CGE etc.)

10. Examples-Counterfactual scenarios (I)
To what extent tax-benefit systems support those who became unemployed at the onset of the Great Recession?
Source: Fernandez et al. (2013) Review of Income and Wealth

11. Examples-Counterfactual scenarios (II)
Poverty effects of child related policy instruments in Poland
Source: Levy, Morawski and Myck, Euromod Working Paper 3/08

12. Examples-Work incentives
Calculate Marginal Effective Tax Rates
Source: Jara and Tumino (2013) International Journal of Microsimulation

13. Examples-EU-wide reforms
Net replacement rates with and without a EU-wide UI benefit
Source: Jara & Sutherland (2014) Social Situation Monitor Research Note 3/13

14. Examples-Behavioural reactions
Calculating labour supply elasticities
Source: Bargain et al. (2013) Journal of Human Resources

15. EUROMOD in this course
EUROMOD is continuously being developed and improved
Software version: 2.1.0
Latest public release (H1.0+)
Countries and policies
All 28 EU MS implemented
#of policy years (‘Systems’) implemented varies by country
: BE, CZ, EE, EL, ES, IT, PL, UK (longest series)
: HR (shortest series)
All consecutive years after the starting year-implemented
Data
EU-SILC/ FRS (UK)
training data
# of datasets available –depends on country

16. Overview of EUROMOD design

17. Structure Input microdata (text file in tabular format)
Policy parameters
(XML files-EUROMOD UI)
Simulations/ Calculations
(EURMOD Engine in C++)
Output microdata with additional simulated variables (text file in tabular format)

18. EUROMOD input dataset
Generated (using a software package; ex: Stata) from the source micro-data (SILC)
Text file (in tabular format)
5 types of variables (plus identifiers):
demographic, labour, income, assets, expenditure
Some variables-compulsory (e.g., id, age, weight, incomes)
Harmonised data reference period
No missing values allowed
All income and expenditure –gross values
Incomes & expenditure-at the individual level
Monetary variables reported on (average) monthly basis
Documentation (do-files template , DRD, & EMC)

19. Variable name convention
Names are combination of acronyms: abb**
a – type of information (e.g., y: income, x: expenditure)
bb – specific for each type a (e.g., y| em: employment, se: self employment)
eg. yem: employment income
yse: self-employment income
** further bb’s for additional information/detail
eg. ysebs: business self-employment income
exception id*, eg. idperson, idmother

20. Structure Input microdata (text file in tabular format)
Policy parameters
(XML files-EUROMOD UI)
Simulations/ Calculations
(EURMOD Engine in C++)
Output microdata with additional simulated variables (text file in tabular format)

21. EUROMOD policy parameters
Contain all info about tax-benefit rules
Stored in XML files read by the EUROMOD engine
Common Variables file (VarConfig.xml)
Manipulated via user interface (UI)
UI-stand alone software based on .NET framework
Scope:
Social insurance contributions
Income tax
Non-contributory benefits (means-tested or not)
Contributory unemployment benefits (approximation)
Min wage
Additional policies-country specific!

22. EUROMOD User Interface

23. Installation
Requires Microsoft .NET framework files or an Internet connection to download files in the SETUP process
Complete separation between UI and ‘content’ (i.e. XML) files
Only one copy of the UI but can use multiple ‘content’ files
...but content files must have set structure of folders
Run the Installation Wizard
Set the path to your EUROMOD files
Project path
(if necessary) separate input data and output data paths

24. EUROMOD folder structure

25. Linking EUROMOD to content files

26. User Interface (UI) Single stand-alone piece of software
Mostly point and click but some hot keys are available (standard and specific)
In-built features that allow for improved user control and guidance
Intuitive!!
Features:
Ribbon bar with tabs
Context menus
IntelliSense (suggestion of parameter values )
Drag and drop
Bookmarks and comments
Built-in help
Display customization
…much more
New features and capabilities added over time

27. User Interface (UI)
Ribbon bar
Run button
Country files

28. Working environment
open country
policy systems
comments
policies

29. Ribbon bar Country tools: - open country to activate buttons
-contains options that manipulate the general parameters of a country file
-name and acronym
-currencies used for parameters in the system and output
-which datasets are available and their characteristics
-Adding and deleting systems
-Viewing options:
-search and replace
-formatting
-bookmarks
-Comparing versions
-More advanced (import/ export systems, add-ons etc.)

30. Systems Settings set exchange rate income used for head definition
output currency
Parameters’ currency

31. Database settings Policy years for which available
characteristics of dataset
adding/ deleting
folder where micro-data stored if different from default

32. Ribbon bar View full spine vs. single policy
Display:
Control display and formatting
View full spine vs. single policy
Conditional formatting (similar idea to EXCEL)
Bookmarks
Matrix view of income lists
Visualising/ hiding key parameters

33. Ribbon bar Administration tools: adding and deleting countries
accessing and administering the variables file
updating progress: overview of available policy systems and datasets
merging versions
administrating switches
administrating exchange rate and HICP series

34. EUROMOD Help
browse
search

35. Variable Administration

36. Variables file
list of all variables defined in the variables file in alphabetical order
name
variable is monetary or non-monetary
automatic label
description of variable for countries where it is used

37. Adding a variable
new empty row;
fill in name and monetary

38. Naming a variable acronyms
UI checks validity of name and existence of the variable

39. Filtering variables
select filters

40. Context menus

41. Context Menus Activated by right-clicking Column headings Row headings
Function headings/ parameter names
Comments
Intuitive options controlling the respective elements

42. IntelliSense