measure of welfare, as used by Serbia’s official poverty and inequality indicators. Appendix 1 explores an alternative question about the incidence of indirect taxes over the life cycle with respect to household consumption as a proxy for permanent income, using adjustments by the income-consumption ratio. The estimated value of indirect taxes that can be included in the analysis reflects the extent of information available in the HBS. In most countries, total consumption of households in the household surveys (HBS) represents a fraction of household consumption reported in the National Accounts. In this application of the methodology to Serbia, the fraction of indirect taxes that can be captured in the analysis (Table 1) closely reflects the fraction of consumption that is captured in the HBS (close to 60 percent, see also Appendix 4). Due to the lack of an available input-output table in Serbia, this analysis has not been able to estimate indirect effects of indirect taxes.

On the spending side, the SILC includes detailed information on who received payments from contributory and non-contributory social protection programs. Among contributory benefits, the data includes all types of pensions (old-age, disability, survivor’s, agricultural, pension from abroad, pensions from private schemes), unemployment benefit, and sickness benefit. The non-contributory benefits included in the survey are financial social assistance, child allowance, parental allowance, foster care benefits, war veteran benefits, severance payments, one-off assistance paid by local governments, heating and utility bills allowance. Wage compensation during maternity leave is not defined as such in the data, but we use the question “Did you receive any pregnancy-puerperal benefits” for this purpose. Caregiver allowance is placed in one variable, so it is not possible to distinguish what is contributory and received through the Pension Fund and what is noncontributory and received from the Ministry of Labour, Employment, Veteran and Social Affairs. We used the reported values from the SILC database for all the benefits.<sup>9</sup> Assigning the value of public spending on education follows the government cost approach. Since the education system is mostly public, we calculate per beneficiary input costs by level of education as total government spending divided by the number of pupils in each level of education. This per pupil expenditure is then assigned as education benefit to each student. We use the number of students from the SILC data for tertiary education since it includes post graduate students. For the other levels of education, the number of students from the SILC is almost equal to the numbers from administrative data. For health expenditures, since access to services is near universal, we follow the cost of insurance approach and assign per capita expenditures (obtained by dividing total expenditure by the total population in Serbia) for each person in the dataset.<sup>10</sup>

> 9 For the financial social assistance, reported values are used, complemented by imputed values for some households. Validation results indicate that the number of individuals that report receiving the financial social assistance in the SILC data roughly corresponds to the number of beneficiaries in the administrative data. However, total expenditures in the survey are underestimated by about 50 percent. After careful investigation of the reported amounts, this underestimation seems to be largely due to reporting the monthly, instead of yearly as asked, amounts in the SILC data set. For those that report amounts close to the monthly benefit levels (about 35 percent of the total population that report the receipt of the benefit), we impute administrative benefit amounts. After this correction, the total value of financial social assistance from the SILC equals 86 percent of its value in administrative data.

> 10 The values for education and health benefits are scaled so that the ratio of benefit to income is the same in the administrative data (budget divided by household income) and survey data (benefit divided by market income) (following the CEQ Handbook).

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