Older workers

METHODS

EUROMOD covers all key features of social security contributions, income tax, and cash benefits, as well as indirect taxes (value added tax and excise duties), and enables the calculation of the effects of changes in labour market status and related incomes (as well as of policy changes) on the eligibility for (other) policies and on the resulting household incomes as well as fiscal revenue or expenditure. The latest EU-SILC data (EU-SILC 2024) linked to data from the 2019/20 household budget survey are used as input data.

Specificities of the project include:

• The LMA add-on in EUROMOD is a tool that can be used to change the labour market status of individual observations based on probabilities or assumptions (in this specific case, increasing the employment rate among older people; original labour market status: unemployed, economically inactive, or already retired; new labour market status: employed). Alternatively the labour market status can be adapted directly in the input data.
• In addition to social (security) and income tax as classic elements of EUROMOD, consumption taxes (value added tax and excise duties) can also be simulated with EUROMOD on the basis of the combined input data set from EU-SILC and the household budget survey, based on fixed consumption elasticities (an increase in income by x leads to an increase of y in consumer spending, divided among the central COICOP groups).
• Additional pension expenditure resulting from the increased number of contribution months due to additional employment can be roughly estimated outside EUROMOD at the national level. 

All calculations (tax revenues, social insurance contributions, less benefit payments, additional pension expenditure) refer to the calendar year 2026.