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

Abstract

Fiscal system microsimulation models enable the simulation of taxes, social insurance contributions, and social benefits, thus allowing researchers to predict the effects of a potential reform of these fiscal instruments on the distribution of disposable income, work incentives, as well as on budgetary revenue and expenditure. Although microsimulation models are one of the key tools for academic and policy analysis in other EU countries, such models have not been systematically developed and used in Croatia so far. In September 2015 researchers from the Institute of Public Finance therefore launched the research project ”Application of Microsimulation Models in the Analysis of Taxes and Social Benefits in Croatia” (hereinafter: the Project), which is outlined in this paper.