Sources: Authors' calculations based on Ministry of Finance data Regarding in-kind transfers, social spending on health amounted to 5.9 percent of GDP in 2016. Health care in Serbia is provided on a near universal basis through a compulsory health insurance for all employed and self-employed individuals and their families. The state also provides insurance for pensioners, unemployed <mark>and their family members, workers from lossmaking state-owned enterprises,</mark> refugees, and certain vulnerable groups (e.g., single parents). According to data from the Health Insurance Fund, only around 3 percent of the total population is not covered by health insurance. Mandatory health insurance covers the whole basic range of health services. <mark>The central government (Ministry of Health) or local governments (for primary protection) pay for investments in facilities and equipment from general tax revenues. The Health I</mark> nsurance <mark>Fund covers current expenditures (salaries, utility expenses, medical supplies, etc.) and is mainly financed through health contributions.</mark> Spending on education amounts to 3 percent of GDP. Preschool (for 5 to 6-year-olds) and primary school (up to age 15) are mandatory. Most students are in free public schools. The public education system has the largest enrollment with 91 percent of the children enrolled in pre-school programs, 99 percent in primary schools, 98 percent in secondary schools, and 87 percent at higher education institutions. Preschools are financed by the local self-governments, so the parent fee depends on the extent to which daycare is subsidized by the local government. In the capital, Belgrade, 80 percent of the full price is subsidized by the city government that, since 2015, started to subsidize daycare in private pre-school institutions as well.

# III. **Data and methodology**

## **Data sources**

This analysis combines household survey data with data from the national accounts, Ministry of Finance public finance data, and reports of the Statistical Office of the Republic of Serbia. The household surveys used as the basis for the analysis are the Survey on Income and Living Conditions (SILC) for 2017 (which refers to 2016 income) and Household Budget Survey (HBS) for 2016. The SILC is the most comprehensive survey used in the European Union countries to collect microdata <mark>on income, poverty, social exclusion and living conditions.</mark> The SILC has been the basis for officially monitoring household welfare, poverty, and social inclusion in Serbia since 2013. The HBS contains both income and expenditure data, but the level of details on income components and benefits received is less than the SILC, and the sample size is smaller. Therefore, this analysis is primarily based on the SILC while household consumption information in the HBS is used to estimate the impacts of indirect taxes. Appendix 4 explains how value added tax and excises are estimated from the HBS and imputed for each household in the SILC data.

## **Approach**

This paper follows the Commitment to Equity (CEQ) approach developed by Lustig (2018) to analyze the distributional impacts of fiscal interventions. For each household, we define the following income concepts and calculate them for each household in the survey data: 10