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Little is known yet about the impact of the COVID crisis on household income and jobs in absence of real time information on these variables. A recent literature strand has sought to overcome data limitations to assess the distributional impact of policy measures taken in the EU using various empirical approaches. However, despite the importance of behavioural effects, transitions from work to unemployment or inactivity (or vice versa) are considered exogenously in this literature. This paper explains how EUROLAB, a multidimensional discrete choice labour supply model, can be used to take account of behavioural effects in the face of exogenous demand shocks. We show that it is possible to account for behavioural effects endogenously using a procedure permitting a consistent introduction of sectoral demand shocks and the assessment of COVID-19 related reforms under equilibrium conditions. We illustrate the use of our model considering the case of a simplified wage subsidy scheme using Italian SILC. Our empirical results support the theoretical model, showing in particular how sectoral demand shocks lower wages, employment and increase unemployment under equilibrium conditions. Furthermore, the results show that the labour market reacts differently to the introduction of the wage subsidy scheme, depending on whether the wage subsidy is allocated to potential beneficiaries before or after labour market equilibrium is achieved. In the short-run, a wage subsidy helps to preserve jobs. From a longer-term perspective, it should contribute to the recovery of the labour market although the return to pre-shock employment level depends on a number of factors related to the subsidy (such as duration and amount) and the potential of the labour market to create new jobs.

In view of the political debate on the future sustainability of pensions system in Austria and given the low participation of older worker in the labour market, in this paper we try to shed light on employment and retirement behaviour while a combination of reduction in pension benefits along with income support is provided. We find out that reforms characterized by moderately generous income support while working along with lower pension entitlement in early retirement yield higher social welfare compared to the current system. The labour supply response signals increase under the proposed reforms among middle-income males, in the age category 55-60, whereas these reforms seem to be ineffective for women. These findings emphasize the importance of introducing pension reforms complemented with tax-benefits policies such that the former remove the disincentives to retire earlier and the later enhance the employment of workers in preretirement age.

In this paper we analyze the effects of Minimum Guaranteed Income (MGI) schemes on labour supply of Italian married couples by applying a behavioural micro-simulation tax-benefit model. The Tax-Benefit Model applied is the static micro-simulation model of EUROMOD. A household labour supply model is simulated with different tax rules where MGI is an option. The simulated tax regimes are Negative Income Tax (NIT), Workfare Tax (WF) and Universal Basic Income (UBI). These exercises of behavioural micro-simulation tax-benefit are performed at national and regional level. Our main finding is that changes in labour supply due to these tax-transfer rules are small and this is in favour of such income support policies. Concerning tax-transfer rules without hour's constraint, such as UBI and NIT, they imply labour disincentives more in the South than in the North of the country, and the effect is amplified with the increase of generosity level. Considering the welfare effects of these tax-transfer rules, we find that there are more winners than losers in the south than in the north as there are more households participating in these MGI schemes due to their low income status.

This paper describes EUROLAB, a labour supply-demand microsimulation model that relies on EUROMOD, the static microsimulation model for the European Union countries. EUROLAB is built on a multidimensional discrete choice model of labour supply and accounts for involuntary unemployment. The model estimates individual changes in supplied hours of work and participation as a reaction to a hypothetical or real taxtransfer reform, often referred to in the literature as "second-order" effects. Furthermore, the model allows for the demand-side effects of a labour market that, depending on how elastic it is, would lead to a different labour supply when the market reaches its equilibrium. The model is unique in covering 27 countries under the same specification of preferences, opportunity set representation and the same concept of income and working hours. We illustrate the usefulness of the model by showing several examples of EUROLAB, using both the one-dimensional and multidimensional versions. Potential extensions of the model are also discussed in the paper.

Abstract
This paper analyzes the effects of hypothetical MW (HMW) increases on social and fiscal outcomes in 21 European Union (EU) countries with a statutory national MW (NMW) based on a microsimulation approach using EUROMOD. The methodological challenges related to the use of available EU household survey data are described, along with the choices made to address these challenges. The paper assesses hypothetical scenarios in which countries with a statutory NMW increase their minimum wage (MW) to various reference values, set in relation to the gross national median and average wage. The model simulations suggest that MW increases can significantly reduce in-work poverty, wage inequality, and the gender pay gap, while generally improving the public budget balance. The implied wage increases for the beneficiaries are substantial, while the implied increases in the aggregate wage bill are generally modest. Extensions explore possible effects on employment and labor supply at the intensive margin.

This paper analyses the first-round effects of hypothetical minimum wage increases on social outcomes in 21 EU countries with a statutory national minimum wage based on a microsimulation approach using EUROMOD. The methodological challenges related to the use of available EU household survey data are described, along with the choices made to address these challenges. The paper assesses hypothetical scenarios in which countries with a statutory national minimum wage increase their minimum wage to various reference values, set in relation to the gross national median and average wage. The model simulations suggest that minimum wage increases can significantly reduce in-work poverty, wage inequality and the gender pay gap, while generally improving the public budget balance. The implied wage increases for the beneficiaries are substantial, while the implied increases in the aggregate wage bill and, as a consequence, possible negative employment impacts, are generally modest.

The increasing flow of immigrants into Europe over the last decade has generated a range of considerations in the policy agenda of many receiving countries. One of the main considerations for policymakers and public opinion alike is whether immigrants contribute their 'fair' share to their host country's tax and welfare system. In this paper, we assess the net fiscal impact of intra-EU and extra-EU migration in 27 European Union (EU) Member States. We find that migrants in the EU, on average, contribute more than natives to welfare states. However, when we take an age-specific life-cycle perspective, we find that natives generally show a higher net fiscal contribution than both groups of migrants. Among migrants, extra-EU migrants contribute less than intra-EU migrants. We then use a demographic microsimulation model to project the potential net fiscal impact of migration in the EU into the future. We show that despite the fact that intra-EU migration contributes to reduce the strong negative impact of population ageing, its contribution is not sufficient to offset the negative fiscal consequences.

The increasing flows of immigrants in Europe over the last decade has generated a range of considerations in the policy agenda of many receiving countries. One of the main considerations for policy makers and public opinions alike is whether immigrants contribute their "fair" share to their host country tax and welfare system. This paper seeks to answer this question based on an empirical assessment of the net fiscal contributions of immigrants in the 27 EU Member States using EUROMOD, a EU-wide tax-benefit microsimulation model. In addition to the traditional view of the tax-benefit system, we add indirect taxation and in-kind benefits to the analysis of net contributions. Our findings highlight that migrants on average contributed about 250 euro per year more than natives to the welfare state in 2015. However, when we take an average age-specific life-cycle perspective, we find that natives generally show a higher net fiscal contribution than both, intra-EU and extra-EU migrants, while extra-EU migrants contribute on average less than intra-EU migrants.

The increasing flows of immigrants in Europe over the last decade has generated a range of considerations in the policy agenda of many receiving countries. One of the main considerations for policy makers and public opinions alike is whether immigrants contribute their "fair" share to their host country tax and welfare system. This paper seeks to answer this question based on an empirical assessment of the net fiscal contributions of immigrants in the 27 EU Member States using EUROMOD, a EU-wide tax-benefit microsimulation model. In addition to the traditional view of the tax-benefit system, we add indirect taxation and in-kind benefits to the analysis of net contributions. Our findings highlight that migrants on average contributed about 250 euro per year more than natives to the welfare state in 2015. However, when we take an average age-specific life-cycle perspective, we find that natives generally show a higher net fiscal contribution than both, intra-EU and extra-EU migrants, while extra-EU migrants contribute on average less than intra-EU migrants.

The increasing flows of immigrants in Europe over the last decade has generated a range of considerations in the policy agenda of many receiving countries. One of the main considerations for policy makers and public opinions alike is whether immigrants contribute their "fair" share to their host country tax and welfare system. This paper seeks to answer this question based on an empirical assessment of the net fiscal contributions of immigrants in the 27 EU member states using EUROMOD, a EU-wide tax-benefit microsimulation model. In addition to the traditional view of the tax-benefit system, we add indirect taxation and in-kind benefits to the analysis of net contributions. Our findings highlight that migrants on average contributed about 250 euro per year more than natives to the welfare state in 2015. However, when we take an average age-specific life-cycle perspective, we find that natives generally show a higher net fiscal contribution than both, intra-EU and extra-EU migrants, while extra-EU migrants contribute on average less than intra-EU migrants.

This report provides an analysis of the fiscal impact of migration in the European Union in the past and the future. It highlights that currently natives generally show a higher net fiscal contribution than extra-EU migrants and a similar contribution to intra-EU migrants. However, due to ageing of the native population, this relationship is bound to reverse in the near future. The report calculates that by 2035 an average extra-EU migrant would be a net beneficiary of public transfers, but to a lesser extent than the average native would, while intra-EU mobile citizens would continue being net contributors. The report also analyses six possible policy scenarios and their implications for the fiscal contributions of extra- EU migrants. These simulations highlight how acting on the size of the flows of new migrants without removing the obstacles to their full labour market integration would yield small fiscal benefits for the hosting country. Labour market policies targeted at increasing labour participation of migrants could generate large fiscal gains. To evaluate the static net fiscal impact of migration based on micro-data the analysis uses EUROMOD, a tax-benefit microsimulation model for the European Union enriched with data on in-kind benefits. This is based on OECD data for apportioning the cost of education social housing and health care provision. For projecting the long-run fiscal effect of migration, the simulations use CEPAM-Mic, a dynamic microsimulation projection model.

The adoption of flat tax systems in Central and Eastern European countries have often been supported by arguments of simplicity, higher compliance and lower distortionary effects. However, since income inequality is high in these countries, the question of introducing some progressivity has come to the fore in both policy and academic circles. In this paper, we combine microsimulation and macro models to analyze the effects of moving from a flat to a progressive tax system and we find that a reduction in income inequality can be achieved with positive, albeit negligible, employment and growth impact.