COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Better assessing the distributional impact of Member States’ policies
Date: 2022-09-28
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: climate change policy, coronavirus disease, digital transformation, distribution of income, green economy, impact study, labour market, marginalisation, social inequality, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.9.2022  COM(2022) 494 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Better assessing the distributional impact of Member States’ policies             {SWD(2022) 323 final}  
 
 
Commission Communication  

Better assessing the distributional impact of Member States’ policies 

Evidence-based policymaking is crucial for ensuring successful policies and the credibility of 
policy actions. In particular, impact assessments allow to make informed policy choices and 
distributional impact assessments help understand how they are likely to affect different parts 
of the population. This is especially relevant as the European Union and its Member States 
strive for socially fair digital and green transitions and face challenges related to the rising cost 
of living due to the Russian war of aggression in Ukraine.  

Europe’s  unique  social  market  economy  is  the  bedrock  of  its  prosperity.  In  her  political 
guidelines, President von der Leyen stressed the importance of leaving no one behind in the 
digital and green transitions. She also highlighted the contribution of the European Pillar of 
Social  Rights  proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  in 
2017, setting out 20 principles for a strong social Europe that is fair and inclusive and ensures 
equal opportunities. 

At the Social Summit in Porto in May 2021, EU leaders welcomed the target of lifting at least 
15 million people out of poverty and social exclusion by 2030, as presented by the Commission 
in  the  European  Pillar  of  Social  Rights  Action  Plan,  in  line  with  the  United  Nations  2030 
Agenda  for  Sustainable  Development1.  Just  one  year  on  from  the  Social  Summit,  the  EU 
Member States have committed themselves to reaching national targets to collectively achieve 
that goal. In parallel, within the framework of the Action Plan, new initiatives at EU level aim 
to contribute to reducing income inequalities, including the directive on minimum wage and 
the proposal for a Council recommendation on minimum income schemes.  

Poverty  and  income  inequality  are  relatively  low  in  the  EU  by  international  standards,  and 
poverty and social exclusion have declined over the last decade, although income inequality 
did increase for people with lower incomes following the recession in 2008-2012. Action taken 
by the EU and national governments (including temporary job support schemes and automatic 
stabilisers)  cushioned  the  socioeconomic  blow  of  the  COVID-19  crisis  and  prevented 
inequality from further increasing. Still, the pandemic has had a disproportionately negative 
impact on women and some groups like young people, low-skilled workers and persons with 
disabilities.  

While Europe is recovering from the COVID-19 pandemic, social cohesion could be affected 
by current developments. Russia’s unjustified and unprovoked invasion of Ukraine has brought 
high economic uncertainty, especially in the supply of energy and food prices. High inflation 
risks  exacerbating  the  situation  of  low-income  households  and  other  disadvantaged  groups, 
while supply chain uncertainty could have an impact on employment in certain sectors.  

The EU and its Member States are working to cushion  the economic impact of the war. To 
wean Europe off Russian fossil fuels,  the Commission’s  REPowerEU Plan  has  put  forward 
several options: saving energy, diversifying energy supplies, and accelerating the roll-out of 

1 Sustainable Development Goals 1 and 10. 2030 Agenda for Sustainable Development. 

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renewable  energy  to  replace  fossil  fuels  in  homes,  industry  and  power  generation.  The 
Commission’s “Save gas for a safe winter” plan aims at accelerating the phasing out of Russian 
fossil  fuels  and  decreasing  EU  gas  demand  while  paying  specific  attention  to  vulnerable 
consumers. In addition, the Commission proposals for an emergency intervention in Europe’s 
energy markets aim at tackling recent dramatic price rises and ease the pressure they are putting 
on households and businesses across the EU. To counteract rapidly increasing food and energy 
prices, Member States have adopted measures aimed at mitigating the impact of inflation on 
households, in particular the most vulnerable ones. 

Climate change and digitalisation are also expected to have an impact on income distribution 
and inequalities. The green transition has the potential to create up to 1 million additional jobs 
by 20302 and 2 million by 20503 as well as to improve the job quality, but its repercussions on 
the labour market may vary across sectors, regions, degree or urbanisation (urban/rural), skills 
needed or types of jobs. The European Green Deal and the Fit for 55 package present the EU’s 
mid-term  response  to  addressing  climate  change  and  integrate  the  social  dimension  into  its 
policymaking from the outset. To reach the EU’s energy and climate targets for 2030, Member 
States  have  drawn  up  integrated  national  energy  and  climate  plans  to  be  updated  regularly. 
They  are  also  committed  to  adopting  a  comprehensive  policy  for  a  fair  transition  towards 
climate neutrality. The Council Recommendation on ensuring a fair transition towards climate 
neutrality4 sets concrete guidance to Member States on how to address the relevant employment 
and social aspects linked to the transition, including by analysing the distributional impact of 
the policy measures, while making full use of funding opportunities. The Commission has also 
presented  its  vision  for  Europe’s  digital  transformation  by  2030  and  proposed  a  Digital 
Compass for the EU’s Digital Decade5. Basic digital skills for everyone and the opportunity 
for the workforce to acquire specialised skills in information and communications technology 
feature prominently,  as  does  the importance of reskilling and upskilling  in order to  prevent 
exacerbating the digital divide between low- and high-skilled workers. 

Recent  surveys  show  that  social  inequalities  are  Europeans’  biggest  concern  (followed  by 
employment, environmental issues and climate change)6 and the biggest increase in terms of 
concerns at EU level relates to rising prices/inflation and the cost of living7. Even before the 
pandemic, over 80% of EU citizens wanted their national governments to take further measures 
to reduce income inequalities8. High income inequality can have damaging effects on economic 
growth  and  endanger  social  cohesion9,  putting  the  social  market  economy  model  at  risk, 
thereby  undermining European values.  Income inequalities  and lack of social fairness  are a 
growing concern not only for people at risk of poverty or social exclusion, but also for most 
middle-income people.   

2  According  to  the  Communication  from  the  Commission  ‘2030  Climate  Target  Plan’,  COM/2020/562  final,  and  SWD(2020)176  final: 
projections based on E-QUEST using a ‘lower taxation low-skilled labour’ scenario, i.e. assuming a ‘targeted reduction in labour taxation 
which stimulates low-skilled labour supply via higher net wages while simultaneously lowering low-skilled labour costs for firms, thereby 
leading to higher overall employment’. 
3 Based on the 2018 Clean Planet for all impact assessment, the ESDE 2019 reports a potential gain of about 2 million jobs by 2050. 
4 https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2021:801:FIN 
5  The  Digital  Decade  is  the  European  Commission  forward-looking  strategic  vision  for  the  development  of  the  digital  economy  and  the 
transformation  of  European  businesses  by  2030.  The  plan,  presented  by  the  European  Commission  on  9  March  2021,  aims  to  support  a 
prosperous digital future for all. 
6 Future of Europe EB from January 2022. 
7 April 2022 standard Eurobarometer. 
8 Special Eurobarometer 471 Fairness, inequality and inter-generational mobility - April 2018 - - Eurobarometer survey (europa.eu) 
9See for instance Organisation for Economic Cooperation and Development (OECD) (2015), Divided We Stand: Why Inequality Keeps Rising. 

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To  make  sure  that  the  long-term  trends  and  short-term  shocks  described  above  do  not 
exacerbate  existing  inequalities,  it  is  imperative  to  improve  the  quality  of  policymaking  by 
better  assessing  the  distributional  impact  of  existing  and  new  policies  and  reforms.  When 
designing them, it is vital to understand their impact on different socioeconomic groups and 
different  geographical  areas.  This  is  necessary  to  better  target  policies  and  mitigate  their 
possible  adverse  effects,  in  order  to  reach  the  2030  poverty  reduction  goals  and  ensure 
sustainable, inclusive and fair transitions.  

This  Communication  provides  guidance  for  Member  States  on  how  best  to  conduct 
distributional  impact  assessments  on  the  income  of  different  socio-economic  groups10  and 
incorporate them into their policymaking processes. It sets out a process for further developing 
existing  methodologies  together  with  the  Member  States,  and  presents  the  support  the 
Commission can make available to the Member States11. 

The concept of distributional impact assessments 

Impact assessment is a process that gathers evidence to support policymaking12.  Distributional 
impact assessments (DIAs) entail an analysis, usually quantitative, to assess the distributional 
effects  of  policies  (reforms,  investments,  etc.)  on  the  income  of  various  groups  across  the 
population.  DIAs  provide  useful  information  and  help  policymakers  to  choose  between 
different reform options. DIAs can also help identify the need to design flanking measures to 
protect vulnerable groups from the potential negative impacts of certain policies and provide 
valuable information to calibrate those measures.  

DIA techniques can be used to obtain quantitative estimates of the impact of taxes and social 
protection and social inclusion reforms, and also provide indications of the impact of reforming 
publicly provided in-kind services. The importance of equal access to in-kind services such as 
healthcare and education was highlighted during the COVID-19 pandemic13. Monitoring the 
redistributive  effects  of  in-kind  benefits  would  contribute  to  tapping  into  their  potential  to 
mitigate and reduce poverty and can also contribute to making DIAs more comprehensive.   

DIAs can quantify, in advance of their implementation, how specific policies and reforms will 
affect the income of various groups. They can also help to establish in detail the cost of reforms 
(including by considering different options) and design corrective measures. Assessments done 
after measures have started to be implemented contribute to the evaluation of measures once 
data  are  available,  indicating  whether  or  not  further  measures  need  to  be  taken  or  reforms 
corrected.  DIAs are often done as part of budgetary preparations, but it is equally important to 
do them for the design of reforms that might not have a (direct) impact on public budgets, but 
are  liable  to  have  a  greater  impact  on  certain  socioeconomic  groups.  DIAs  should,  where 

10  Further  efforts  should  be  made  in  the  future  to  also  capture  distributional  impact  of  reforms  on  equality  of  opportunities,  but  this 
Communication focuses on income inequality that is much easier to quantify than the other aspects.  
11 The accompanying Staff Working Document provides more granular information, including on current practices in the Member States. 
12 It helps developing a policy response (either a policy reform or an investment) to a certain policy problem by providing the evidence base 
for - and the impacts of - various options. Impact assessments address a number of key potential impacts such as the economic, environmental 
and social impacts as well as the impact on human rights. 
13 The evidence shows that in-kind benefits have a significant redistributive impact. It is important to ensure that policy changes serve the 
needs of the most disadvantaged groups and, at the very least, do not have unintended negative consequences for them. For instance, World 
Health Organization (WHO) Europe’s work on the affordability of healthcare shows that some countries will need to redesign health coverage 
policy, improve the financial protection of particular groups and at the same time seek additional public investment in the health system (see 
WHO/Europe Publications – ‘Can people afford to pay for health care? New evidence on financial protection in Europe’ (2019)). 

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appropriate,  be  integrated  in  wider  analyses  covering  economic,  social,  and  environmental 
impacts of new policy initiatives. 

DIAs can also help significantly improve the quality of public spending and fiscal policies. 
Public  finances  have  been  put  under  strain  by  the  COVID-19  pandemic  and  the  gradual 
normalisation of monetary policy is expected to increase government borrowing costs. Well-
calibrated  reallocations  of  expenditures  or  shifts  in  revenues  can  help  to  ensure  that  public 
budget  deficits  are  kept  under  control,  but  this  can  only  be  sustainable  if  the  distributional 
consequences  are  well  identified  and  weighed  up.  The  presentation  of  the  expected 
distributional  impact  of measures in  draft budgetary plans submitted to  the Commission  by 
euro area Member States is already recommended in Regulation (EU) No 473/2013, but rarely 
provided and the practice could be further improved. In the context of the European Semester, 
the 2022 Employment Guidelines recommend the use of DIAs to improve the effectiveness of 
social protection systems14. 

Key components of a good quality DIA 

Key components of quality DIAs can be identified on the basis of good practices in the Member 
States. These concern their timing, what policies to analyse, the tools (models and data) that 
should be used and how to disseminate the results.     

a.  Who and when should do a DIA and at what level of granularity? 

DIA should be conducted both before and after the implementation of relevant policies. Doing 
a  DIA  during  the  design  of  reforms  and  investments  is  particularly  important  as  it  allows 
policymakers to gauge the impact of the foreseen  policies on different types of households, 
even in cases where the reform is not initially intended to address social objectives (for instance 
in the case of reforms on energy consumption). Post-implementation analyses allow to evaluate 
the impact of reforms and investments on different types of households a certain period of time 
after  the  reform  has  been  implemented.  This  can  help  develop  potential  further  steps  or 
corrections  in  reforms.  They  are  based on hard data,  but  require the disentanglement  of the 
effects of reforms from other changes. Credible post-implementation analyses help to ensure 
the ownership and quality of assessments before implementation. Ideally DIAs should be done 
by authorities at national, and where relevant at regional and local levels.  

It is good practice to present the effect of a full package of policy changes as some interactions 
among them may be missed if their effect is presented separately. This is all the more so, given 
budgetary  changes  are  often  decided  as  a  package,  with  some  measures  compensating  for 
others. Measures that have a considerable impact also warrant individual analysis.  

Entrusting  independent  bodies  with  doing  DIAs  can  help  make  them  more  credible  and 
accurate. Thanks to their expertise, academia or research institutes are well placed to develop 
advanced DIA techniques. Moreover, they are not affected by the same political  motives as 
administrations  when  assessing  decisions  to  which  they  have  often  not  contributed.  The 
replication of results by various institutions can also make for a more comprehensive analysis, 
and enhance its quality and credibility.  

14 Guideline 8.  

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Member States are encouraged to:  

-  systematically do DIAs before implementation for all policies that could affect people’s 
incomes;  and  as  much  as  possible  after  implementation,  evaluate  the  actual  impact  of 
reforms and investments;  

-  analyse both the combined and specific individual effects of policies;  

-  support independent institutions in doing DIAs.  

b.  What  policy  areas  to  choose  for  doing  DIAs  and  what  length  of  time  to 

consider? 

DIAs should cover policy areas that have an impact on household income and their distribution, 
which relates typically to taxes and monetary benefits. Standard models can give an idea of the 
impact  of reforms to  traditional  direct  taxation and monetary  benefits that are generally  the 
focus of  DIAs15. However,  efforts should be made to  assess the impact  of  reforms  in  other 
areas, such as labour market or pension reforms, as well as investment programmes.  

It is worthwhile assessing consumption taxes given their impact is often regressive (as lower-
income  households  spend  more  of  their  income  on  goods  and  services).  This  is  getting 
increasingly important with the growing need to reduce carbon emissions and practise ‘green 
budgeting’. Ideally, Member States should also do DIAs on wealth tax reforms, which have a 
major impact on the long-term dynamics of inequality, and on the effect of changes to in-kind 
benefits, such as healthcare benefits.  

DIAs can be used in a broad range of policy areas. They are crucial for assessing the impact of 
reforms designed to address megatrends, such as the green and digital transitions or the impact 
of recent crises. However, various reforms differ in the extent to which they lend themselves 
to being analysed. For example, DIAs are very useful for assessing the effects of reforms that 
have a direct impact on households’ incomes, such as carbon pricing and the use of carbon 
revenues  or  heating  allowances  for  low-income  households.  However,  it  is  often  less 
straightforward  to  gauge  the  impact  of  new  regulatory  measures  (e.g.  to  improve  energy 
efficiency standards). Post-implementation assessment strategies can nonetheless provide good 
insights into the distributional consequences of such reforms. 

DIAs before implementation should not only focus on the impact of new policies and measures 
on  outcomes  immediately  after  implementation,  i.e.  in  the  following  year  (comparative 
statistics), but should also adopt a multiannual perspective. An incremental policy – pension 
reform, for example – that induces changes slowly over a number of years may not have a very 
large impact in any 1 year, but cumulatively it might have considerable impacts. In these cases, 
DIAs can require long-term projections to take account of the full impact of reforms. Adopting 
a multiannual perspective might also be useful when taking demographic trends into account 
is particularly important. In this case the use of dynamic models might be relevant. 

Member States are encouraged to:  

-  cover  direct  taxes,  social  insurance  contributions  and  social  benefits  in  their 
assessments;  

15 Direct personal taxes, as well as social security contributions and social benefits. 

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- where possible, analyse the effects of other policies, in particular indirect and wealth 
taxes and relevant in-kind benefits, in order to present a  comprehensive DIA of given 
measures and reforms; 

- adopt a multiannual perspective in DIAs of policies whose full impact will materialise 
over a longer period of time. 

c.  What tools to use? 

Microsimulation models are essential as they typically allow users to estimate the net budgetary 
cost of changes to taxes and benefits, the pattern of gains and losses from a policy change and 
the impact of reform packages on poverty and inequality. Advanced models make it possible 
to estimate the impact by gender, or additional equality criteria such as disability or minority 
background, as well as to assess the change in work incentives and the labour market responses 
to policy changes.  

Reforms  of  tax  and  benefit  systems  can  impact  people’s  behaviours  and  change  the 
macroeconomic environment. Incorporating behavioural responses, macroeconomic data16 and 
demographic trends into DIAs can further increase their accuracy.  

DIAs can be done using a country-specific model (currently the case of 10 Member States), or 
the  EUROMOD  model  only  (currently  the  case  of  4),  or  both  (currently  the  case  of  12)17. 
EUROMOD  is  a  tax-benefit  microsimulation  model  maintained  by  the  Commission  and 
available for all the Member States to use. It covers the main aspects of direct taxation, social 
contributions  and  benefits18.  It  can  be  particularly  useful  for  Member  States  with  limited 
experience of assessing distributional impacts19. One distinctive advantage of EUROMOD is 
that it allows the calculation in a comparable manner across Member States, of the effects of 
direct  taxes  and  benefits  on  household  incomes,  poverty  and  income  inequality  and  work 
incentives. Country-specific models, involving more tailor-made approaches, tend to be used 
by Member States with a long-standing tradition of doing DIAs.   

Quantitative analysis can be complemented with more qualitative considerations to identify the 
groups most likely to be affected by a set of policies.  

Member States are encouraged to:  

-  use a microsimulation model that estimates the effects of policy changes on households’ 
incomes  throughout  the  income  distribution,  as  well  as  their  effects  on  poverty  and 
income inequality; 

- develop further their models by using advanced techniques that incorporate behavioural 
responses and macroeconomic data; 

16 Microsimulation models often do not account for behavioural responses (such as the estimated effects on labour supply of changes in the 
income tax) or macroeconomic feedback (for instance increased labour supply may increase GDP and government revenues). Incorporating 
behavioural responses and macroeconomic feedback can be done by building more advanced models taking into account the various effects 
(such as incorporating  behavioural replies into a microsimulation model or linking it to a macroeconomic model). 
17 See the accompanying Staff Working Document for more details.  
18 It is kept up to date by the Joint Research Centre (JRC) in cooperation with Eurostat and national experts. 
19  The  software  and  models  are  readily  available,  but  national  authorities  or  researchers  still  need  to  apply  to  Eurostat  for  access  to  the 
underlying data.  

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-  complement  quantitative  with  qualitative  analysis,  in  order  to  generalise  the 
consideration of distributional impacts in policymaking. 

d.  What data to use? 

A good DIA requires comprehensive and timely data. Survey data – such as European Union 
Statistics on Income and Living Conditions (EU-SILC)20 – provide detailed sociodemographic 
and income information, crucial for the quality of a DIA. However, there is usually a time lag 
between when a survey is conducted and when the results are available21. Administrative data 
can  fill  in  the  gaps,  with  more  accurate  and,  in  most  instances,  relatively  more  timely 
information,  a larger sample size and  greater  geographical  detail.  Combining a survey  with 
administrative  records  on  income,  welfare  and  taxation  can  also  significantly  improve  the 
quality of a DIA. This can also enable the broadening of the scope of modelling, while retaining 
the detailed socioeconomic information from surveys.  

More must be done to make national administrative data more easily available22.  Anonymised 
(unsampled) administrative data are a valuable resource for precise DIA analysis23. Such data 
should be accessible to various public bodies and independent researchers in a transparent way. 
It is also important to stress the crucial role of national statistics institutes in providing timely, 
comprehensive and detailed surveys and other data that can be used for DIA analysis.  

Member States are encouraged to:  

- combine survey data and administrative data when doing DIAs; 

- make administrative data more readily available for both public bodies and researchers.  

e.  What indicators to choose? 

Using  common  metrics  enables  policymakers  to  better  compare  the  results,  and  assess  the 
impacts of, various new measures. DIA outputs should ideally gauge the impact of reforms on: 
1)  the  distribution  of  income24;  2)  the  level  of  inequality,  by  relying  on  a  selection  of  key 
indicators (such as the income quintile share ratio S80/S20)25; 3) the level of poverty, by using 
key  related  indicators  such  as  the  at-risk-of-poverty  rate  and  the  relative  median  at-risk-of-
poverty gap26.  

20 Overview - Income and living conditions - Eurostat (europa.eu)  
21 In in the case of EU-SILC, in the framework of the Regulation 2019/1700, Eurostat receives microdata from Member States for operation 
year N by the end of year N, and complete datasets with final income data is received by 28 February of year N+1. Country indicators are 
published as soon as the data is validated and approved. 
22  In line with  A European strategy for data, stressing the importance of data sharing between public authorities, as this can significantly 
improve policymaking and the delivery of public services. 
23 The reason being that uniform samples are not adapted to measure inequality when concentration is high.  
24 Equivalised disposable income, meaning income after direct taxes and benefits and adjusted for household composition. Household members 
are  equalised  or  made  equivalent  by  weighting  each  according  to  their  age,  using  the  so-called  modified  OECD  equivalence  scale. 
(https://www.oecd.org/economy/growth/OECD-Note-EquivalenceScales.pdf) 
25 European Pillar of Social Rights Social Scoreboard headline indicator; S80/S20 is the share of income going to the richest 20 per cent 
compared to the poorest 20 per cent of the population. It is also useful to present its decomposition between the upper part S80/S50 and lower 
part S50/S20 of the income distribution. It can be complemented by the income share of the bottom 40% of the population along the income 
distribution (S40 which constitutes the basis for the SDG goal on inequality reduction) or the Gini index (which is the most  widely used 
synthetic measure of income inequality, capturing what percentage of the domestic income of a country each cumulative percentile of the 
population owns and converting it into an index). 
26 The at-risk-of-poverty rate (AROP), calculated as the proportion of people with an annual equivalised disposable income below 60 per cent 
of  the  median annual  equivalised disposable  income, is  one  of  three  components  of the  at-risk-of-poverty-and-social-exclusion  (AROPE) 
indicator that underpins the EU target to reduce poverty and social exclusion by 2030. The relative median at-risk-of-poverty gap shows the 
difference  between  the  median  equivalised  disposable  income  of  people  below  the  at-risk-of-poverty  threshold  and  the  at-risk-of-poverty 
threshold (cut-off point: 60% of median equivalised income).  

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There may also be other relevant output, depending on the national situation and the available 
data.  This  is  why  DIAs  are  often  done  to  assess  the  impact  of  reforms  on  various  groups27 
differentiated by age and gender (also for gender budgeting28) and type of household (such as 
working age households, retirement age households, single parent  households,  single adults 
and couples, with and without children). Other analyses, such as those focusing on people with 
migrant  backgrounds,  with  disabilities  or  any  other  disadvantaged  group,  as  well  as  groups 
differentiated by degree of urbanisation or region, could be worth doing. 

Member States are encouraged to: 

- 

ensure that DIAs present the effect of policies on the various groups along the income 
distribution (such as income deciles) as well as the levels of inequality and poverty 
indicators; 

-  as  much  as  possible,  present  the  results  broken  down  by  age,  gender  and  specific 

socioeconomic groups.  

f.  How to disseminate DIAs?  

Publishing the analysis of the impacts on different income groups increases transparency of 
policy making. It allows for more scrutiny of the impacts of proposed measures and thereby 
can improve the quality of the public debate and enhance trust in decision-making processes. 
Higher  transparency  on  the  impact  of  reforms  can  be  expected  to  lead  to  the  adoption  of 
measures  that  will  reduce  or  eliminate  the  negative  impact  on  poverty  or  the  widening  of 
inequalities. It can also help debunk false perceptions about the ultimate effect of policies by 
giving clarity  on beneficiary  groups.  For instance,  draft  budgetary plans  are  a  good way  of 
presenting the impact of related policy measures on different parts of the population. 

When done by administrative bodies, making DIAs public in an accessible way nurtures public 
debate and might help gain acceptance of measures and reforms. DIAs should be presented in 
publicly  accessible  budgetary  documents  (e.g.  draft  budgetary  plans)  and  any  other  type  of 
document  accompanying  the  design,  implementation  and  assessment  of  reforms  and 
investments,  such  as  (integrated)  impact  assessments.  This  way,  apart  from  enabling  more 
evidence-based decisions, DIAs can give a more credible picture to inform public debate on 
the effects of policy reforms, including social partners and civil society.  

To garner the interest of the media and the public, DIA results need to be considered reliable 
and reasonably easy to understand. The publication of DIAs should therefore be accompanied 
by a presentation  of the  key modelling decisions underlying the analysis. A presentation  of 
DIA results planned at given moments in time (e.g. every year) can be helpful as it signals that 
results are communicated systematically. DIA results may also be considered more reliable and 
credible  if  the  analysis  has  been  done,  or  can  be  verified  by,  independent  researchers.  By 
facilitating the replication of the analysis, the publication of all relevant modelling assumptions 
and decisions and data can also enhance credibility.  

27 DIAs are useful to present both the differences in the initial situation of various groups and the changes expected from policy interventions 
(relevant for both and environment and social dimensions where socially disadvantaged groups tend to experience poorer environments). 
28 According to the Council of Europe’s widely used definition, gender budgeting is an application of gender mainstreaming in the budgetary 
process. In short, it is a strategy and a process with the long-term aim of achieving gender equality goals by focusing on how public resources 
are collected and spent. See for more details Bova, E., Jerosch Herold da Costa Reis, J. (2022) Gender Budgeting Practices: Concepts & 
Evidence. European Economy Discussion paper 165, European Commission.  Gender Budgeting Practices: Concepts and Evidence  

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Member States are encouraged to:  

- present DIA results in public documents in a way that can be easily understood by the 
general public;  

-  facilitate  public  access  to  the  underlying  models,  assumptions  and  data,  so  that  the 
results can be replicated.  

How the Commission relies on DIA and supports Member States  

The Commission’s track record in evidence-based policymaking has continuously improved in 
recent years. It will continue to systematically assess the economic, social and environmental 
impacts of its policy actions to ensure the high quality of proposed legislation, as envisaged in 
its ‘better regulation’ system29/30.  

The Commission will continue doing DIAs in order to give more prominence to distributional 
considerations relevant for the design of reforms and investments. The Commission regularly 
uses EUROMOD to do DIAs of selected reforms in the Member States. The ensuing analysis 
is  also  presented  in  the  country  reports  that  constitute  policy  assessments  as  part  of  the 
European Semester, the framework for integrated surveillance and coordination of economic 
and employment policies across the European Union.  

The Commission  will further support Member States in  setting up or developing their DIA 
practices. This support will be provided by maintaining and further developing the EUROMOD 
model.  The  Commission  makes  the  model  available  to  all  Member  States  and  updates  it 
annually. The JRC provides a range of training courses on EUROMOD, including on how to 
do DIAs. Member States can also request further assistance in developing DIA practices under 
the Technical Support Instrument31.  

The Commission will further support mutual learning by bringing together representatives of 
Member States who are actively involved in doing DIAs in national administrations or, in the 
case of Member States where DIAs are not yet so widespread a practice, those who could be 
involved  in  doing  them  in  the  future.  Discussions  in  mutual  learning  events  cover  various 
aspects of doing DIAs, thereby enabling the exchange of best practices. Since Member States’ 
DIA practices differ significantly from each other, there clearly is added value in learning from 
each  other’s  experience,  drawing  on  best  practices  that  can  be  adapted  to  country-specific 
contexts.  

As part of the mutual learning process with the Member States, the Commission will monitor 
the use of DIAs, in draft budgetary plans or in other contexts, and inform the Social Protection 
Committee  and  the  Employment  Committee,  the  advisory  bodies  for  the  Employment  and 
Social  Affairs  Council,  and  the  Economic  Policy  Committee,  the  advisory  body  of  the 

29 Better Regulation – joining forces to make better laws (COM/2021/219 final).  
30 Better Regulation Toolbox (November 2021), in particular Tool#30. Employment, working conditions, income distribution, social protection 
and inclusion. 
31 In this context, the JRC has been collaborating since 2017 on projects to deliver technical support to Member States on microsimulation and 
the use of administrative data for assessing tax-benefit reforms. This makes it possible to develop a model for DIAs by making greater use of 
EUROMOD, drawing on survey and administrative data. Such projects have been taking place with Greece, Slovakia, Lithuania and Romania. 
Capacity-building and ad-hoc projects are also being carried out with Spain.  

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Economic and Financial Affairs Council.  

The Commission will: 

- continue to regularly do DIAs, including as part of the European Semester; 

-  further  support  Member  States  in  setting  up  or  developing  their  DIA  practices 
(including by supporting mutual learning and the exchange of best practices and making 
available and developing further the EUROMOD microsimulation model); 

- monitor the use of DIAs by Member States. 

Conclusion 

The  confluence  of  various  long-term  trends  and  short-term  shocks  described  in  this 
Communication  underscores  the  importance  of  paying  greater  attention  to  distributional 
considerations while designing reforms and investments. Therefore, Member States are invited 
to follow the guidance provided to expand the use of and improve their DIA practices. The 
resulting analyses should give a credible impact of policies on different socio-economic groups 
and  be  made  available  to  broader  public  to  enhance  the  quality  of  the  policy  debate.  The 
Commission  stands  ready  to  support  Member  States  with  assistance  on  developing  DIA 
methodologies, monitoring the existing practices and providing a forum for exchange of views 
on how to improve DIAs further.   

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