INDOMOD – an Indonesian tax-benefit microsimulation model

UNICEF Indonesia has funded SASPRI to support the Government of Indonesia in developing and updating an Indonesian tax benefit microsimulation model – ‘INDOMOD’ – for in-house use by the Government of Indonesia. The project has involved (i) preparing underpinning datasets for the model using annual extracts of the National Socio-Economic Survey (SUSENAS); (ii) collating Indonesia’s tax and benefit policy rules for 2019 to 2021; (iii) converting the policies into instructions for the EUROMOD software which is the ‘engine’ for the model; (iv) validating the simulations using administrative data. A key objective has been that the model is a sustainable in-house resource for the Government of Indonesia and so has been undertaken with key government officials from the outset, and several training courses have been held for colleagues from a number of government departments.

The first model, based on SUSENAS 2018 data, was developed in 2019. Alongside the model, a country report and manual were prepared and initial training was undertaken.

During the course of 2020 the model was updated with SUSENAS 2019 data and used to undertake analysis of the impact of COVID-19 on poverty, and the impact of the remedial measures that were introduced by the Government of Indonesia to protect those in poverty or at risk of falling into poverty. Due to the pandemic, the training on the updated model was conducted online.

The model was subsequently updated in 2021 using SUSENAS 2020 data and a dataset for 2021 dataset which reflects the impact of the pandemic on jobs and incomes, and 2021 tax-benefit policy rules (both standard policies and policies introduced in response to the COVID-19 pandemic). Analysis was undertaken on Adaptive Social Protection (ASP) in Indonesia, exploring the role of the Indonesian tax-benefit system in improving households’ ability to prepare for and to cope with an economic shock caused by a hypothetical natural disaster (El Niño). Two online training courses were conducted during 2021.

Various working papers and articles relating to the above analytical studies are available here.

UNICEF Indonesia also commissioned SASPRI to prepare a policy brief on child-sensitive social protection in Indonesia, which included analysis using INDOMOD.