EUROMOD HHoT unemployment extensions. Technical report

Tax-benefit microsimulation models are typically used to quantify the effect of specific policy changes on the income distribution based on representative micro data. Such analysis evaluates policies by considering how different tax-benefit elements interact based on the personal, household and labour market characteristics of the underlying population. Hypothetical data takes the population structure out of the equation and focuses on model families with concrete specified personal, household and labour market characteristics. This helps to address broader questions of policy design and to compare systemic differences across countries. The focus of this work is the creation of hypothetical information that is usually not available in micro data. More concretely, I improved the simulation of unemployment policies when using hypothetical data by generating more detailed information on the prior work history in the hypothetical household tool HHoT. This information is taken into account through an extension in the EUROMOD tax-benefit microsimulation models.