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SOUTHMOD – simulating tax and benefit policies for development

The International Inequalities Institute is the new partner of SOUTHMOD, a major international research project financed by UNU-WIDER to develop and use tax-benefit microsimulation models for selected developing countries.

Many low- and middle-income countries are working towards building up their redistributive and social protection systems, particularly in view of the growing risk of future economic crises. In these countries, sustainable financing of public spending in social protection and redistribution would also require increasing fiscal capacity through direct and indirect taxation. Therefore, understanding how the design of the tax-benefit system affects household incomes is crucial to develop effective policies to protect the most vulnerable.

Research under the SOUTHMOD project aims to promote the use of microsimulation models to analyse the impact of different tax-benefit policy reforms on household incomes and government revenues in the Global South. The project represents a major international collaboration between LSE, UNU-WIDER, the Southern African Social Policy Research Insights (SASPRI), and researchers from the low- and middle-income countries for which the models have been built. The III will also play a major role building capacity in these countries to encourage the use of microsimulation models among academics and policy makers.

Research aims

Tax-benefit microsimulation

Tax-benefit microsimulation models combine detailed coding of the legislation of taxes and benefits with representative household level data on incomes and expenditures to simulate individual and household tax liabilities and benefit entitlements in each country.

The models can be used to assess the extent to which policy reforms contribute to changes in poverty and inequality and to make comparisons over time and across countries. They can also be used to simulate the effect of proposed or hypothetical policy reforms and to assess the cushioning effect of taxes and benefits in the event of economic shocks or demographic changes.

Microsimulation models are regularly used by researchers and policy makers in high-income countries. However, such tools are seldom available in low- and middle-income countries, despite the need to assess the effect of taxes and benefits in view of increasing fiscal capacity to build up more sustainable social protection systems.

SOUTHMOD

The SOUTHMOD project was launched in 2016 by UNU-WIDER to develop and encourage the use of tax-benefit microsimulation models for selected developing countries. The SOUTHMOD project currently hosts models for seven African countries (Ethiopia, Ghana, Mozambique, Rwanda, Tanzania, Uganda, Zambia), four Latin American countries (Bolivia, Colombia, Ecuador and Peru) and one country in Southeast Asia (Vietnam). 

The International Inequalities Institute (III) joined the SOUTHMOD project in 2022. Dr Xavier Jara coordinates the maintenance and use of the four Latin American microsimulation models which are part of SOUTHMOD: BOLMOD for Bolivia, COLMOD for Colombia, ECUAMOD for Ecuador and PERUMOD for Peru. 

SOUTHMOD represents  a major international collaboration involving UNU-WIDER, the Southern African Social Policy Research Insights (SASPRI), and researchers from the countries for which the models are built.

Open access and capacity building

All models developed under the SOUTHMOD project are based on the EUROMOD platform and are freely available for non-commercial use. To ensure cross country comparability, SOUTHMOD provides a common modelling framework based on standard rules to handle data and policy simulations (SOUTHMOD modelling conventions). The models are updated annually to capture regular changes in taxes and benefits in each country.

An important part of the project involves building capacity in low- and middle-income countries to encourage the use of microsimulation models for academic research and policy analysis.

The III will play a key role in organizing regular training for local researchers and policy makers in Latin America to expand the network of microsimulation users and to foster interaction between academics and government institutions in the region.

Members

Dr H. Xavier Jara, Assistant Professorial Research Fellow, International Inequalities Institute, LSE
Dr Pia Rattenhuber, Research Fellow, UNU-WIDER
Dr Jesse Lastunen, Research Associate, UNU-WIDER
Dr Anna Zasova, Research Associate, UNU-WIDER
Dr Kwabena AduAbabio, Research Associate, UNU-WIDER
Dr Rodrigo Oliveira, Research Associate, UNU-WIDER
Professor Jukka Pirttilä, Professor of Public Economics, University of Helsinki and Non-Resident Senior Research Fellow, UNU-WIDER  

Partners

Events
  • From the 20th - 23rd November 2023, as part of the SOUTHMOD project, the national team at Universidad del Pacífico in collaboration with UNU-WIDER and the III organised the first training and launch event on the PERUMOD model. The workshop provided participants with comprehensive training to use the tax-benefit microsimulation model effectively. Read more here. 

  • On 5 September 2023, SOUTHMOD partners gathered for the annual SOUTHMOD workshop to exchange experiences and knowledge on tax-benefit microsimulation modelling in developing countries. The in-person part took place in Oslo, Norway, back-to-back with the WIDER Development Conference on domestic revenue mobilization.  

  • As part of the SOUTHMOD project, a training course was successfully held on the use of the microsimulation model ECUAMOD for economic and social policy research. 
     
    The training course took place from 31 July to 4 August 2023 at Facultad Latinoamericana de Ciencias Sociales (FLACSO) in Quito, Ecuador. Among the attendees were PhD and Master students of Ecuadorian Universities as well as representatives from the Tax Revenue Service and the Ministry of Economy and Finance from Ecuador. 

  • As part of the SOUTHMOD project, a training course was successfully organized on the use of the microsimulation model COLMOD.  
       
    The training course took place from 10 to 14 July 2023 at Universidad Externado de Colombia. Among the attendees were PhD and Master students of Colombian Universities as well as representatives from the Ministry of Agriculture, the Department for Social Prosperity, the National Tax and Customs Directorate, among others. 

  • The new microsimulation models for all countries were released to the public in May 2023. III work featured directly as the new models for Bolivia, Colombia and Peru were included. 
     
    Find out more: https://www.wider.unu.edu/news/first-ever-bundle-microsimulation-models-global-south-released 

Publications

Jara, H. X., Montesdeoca, L., Colmenarez, M. G. & Moreno, L. (2025). Two decades of tax-benefit reforms in Ecuador: How much have they contributed to poverty and inequality reduction? World Development, https://doi.org/10.1016/j.worlddev.2025.106976 

Jara, H. X., Rodríguez, D., Collado, D., Torres, J., Mideros, A., Montesdeoca, L., Avellaneda, A., Chang, R., & Vanegas, O. (2025). Assessing the role of tax-benefit policies during the COVID-19 pandemic: Evidence from the Andean region. Review of Development Economics, 226-246. https://doi.org/10.1111/rode.13125

Jouste, M., Kanbur, R., Pirttilä, J. and Rattenhuber, P. (Eds.) (2025) Poor Protection: The Role of Taxes and Social Benefits in the Developing World During Crises. Oxford University Press. WIDER Studies in Development Economics. Oxford University Press.

Jara, H.X., Rodríguez, D., M. Dondo, C. Arancibia, D. Macas, R. Riella, J. Urraburu, L. Llamas, L. Huesca, J. Torres and R. Chang (2025). ’The Role of Tax–Benefit Systems in Protecting Household Incomes in Latin America during the Covid-19 Pandemic’ in Poor protection: The role of taxes and social benefits in the developing world during crises, Edited by Maria Jouste, Ravi Kanbur, Jukka Pirttilä, Pia Rattenhuber, Oxford University Press.

Jara, H. X., Montesdeoca, L., Colmenarez, M. G. and Moreno, L. (2024). El efecto de los impuestos directos y las transferencias monetarias sobre la pobreza y la desigualdad en Ecuador. In H. X. Jara, A. Mideros & M. G. Palacio (Eds.), Política social, pobreza y desigualdad en el Ecuador: 1980-2021. Centro de publicaciones PUCE. 

Arancibia, C. , Macas, D. (2024) SOUTHMOD country report Bolivia - BOLMOD v2.1. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

Gasior, K., Wright, G., McLennan D., Noble, M., Jara, H.X., Malerba, D., Dankmeyer, m. and Beier, S. (2024) The Role of Social Protection for a Just Transition in Developing and Emerging Economies.

Jara, H.X., Martín, F., Montesdeoca, L., Vera, L., Colmenarez, M. G. (2024) SOUTHMOD country report Ecuador - ECUAMOD v4.3. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

Lastunen, J., de Mahieu, A., Gasior, K., Jara, H.X., Pirttilä, J. (2024) Microsimulation of tax-benefit systems in the Global South: a comparative assessment. WIDER Working Paper 2024/35. Helsinki: UNU-WIDER. https://doi.org/10.35188/UNU-WIDER/2024/439-9

Rodríguez, D. , Silva, J. , Zapata, M. (2024) SOUTHMOD country report Colombia - COLMOD v2.4. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

Torres, J. , Chang, R. (2024) SOUTHMOD country report Peru - PERUMOD v2.5. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

Arancibia, C. , Macas, D. (2023) SOUTHMOD country report Bolivia - BOLMOD v2.0. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

Bargain O, Carrillo-Maldonado P, Jara X. (2023). Top earners and earnings inequality during the COVID-19 pandemic: Evidence from Ecuadorian administrative data. WIDER Working Paper 2023/4. Helsinki: UNU-WIDER. https://doi.org/10.35188/UNU-WIDER/2023/312-3. 

Jara, X. , Martín, F. , Montesdeoca, L. , Vera, L. , Colmenarez, M.G. (2023) SOUTHMOD country report Ecuador - ECUAMOD v4.2. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

Rodríguez, D. , Rojas, S. , Paredes, A. , Zapata, M. (2023) SOUTHMOD country report Colombia - COLMOD v2.3. Helsinki: UNU-WIDER. Helsinki: UNU-WIDER.

 

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