WIFO-Micromod and EUROMOD

Tax-transfer microsimulation for policy evaluation

WIFO-Micromod is a microsimulation model used to analyse the distributional, redistributive, and fiscal effects of economic and social policy reforms. Based on EU-SILC data and calibrated with supplementary data sources, it enables ex-ante and ex-post analyses of changes in personal income taxation, social security contributions, and transfer payments at the individual and household levels. It quantifies effects on disposable household incomes, at-risk-of-poverty rates, income inequality, and public budgets, thereby supporting the targeted design of the tax-benefit system. In addition, the model serves for the structural analysis of income distributions and their evolution, as well as for examining the interaction between household structures, labour market constellations, and the tax-benefit system. A detailed tax-transfer module and its compatibility with other models of the Austrian Institute of Economic Research (WIFO) enable consistent micro–macro assessments. In addition, EUROMOD, a harmonised microsimulation model covering European countries, is used for the nowcasting and forecasting of distributional indicators.

WIFO-Micromod is a central analytical tool of the Austrian Institute of Economic Research (WIFO) for systematically assessing the short-term expected distributional, redistributive, and fiscal effects of economic policy measures. It supports evidence-based policymaking by providing answers to key questions such as: Who gains or loses from a reform? To what extent? And how does it affect inequality?

WIFO-Micromod enables both ex-ante and ex-post evaluations of reforms in the areas of income taxation, social insurance contributions, and public transfer, at both the individual and household level. It is based on representative microdata (EU-SILC) and uses detailed information on income, labour market participation, household composition, and socio-demographic characteristics. This allows the heterogeneity of the population to be captured and policy measures to be analysed with regard to their differentiated social impacts.

Key outputs of the model include: changes in disposable income (across different household groups), and the budgetary impact of reform proposals. Comparisons between the status quo and reform scenarios provide quantifiable evidence to support policy debates and fiscal planning.

WIFO-Micromod features a detailed tax-benefit module and can be linked with other data sources and WIFO-internal models, enabling the integrated analysis of macroeconomic and distributional policy questions. Additional modules allow the extension of the model to cover nowcasting and forecasting, indirect taxes, and in-kind public benefits.

In addition, EUROMOD – the EU-wide microsimulation model developed by the European Commission (Joint Research Centre) – is also employed. The areas of application and functionality of both models are largely similar. As part of the quarterly WIFO Economic Outlook, EUROMOD is regularly used to nowcast and forecast income distribution indicators.