Microsimulation of social policy in the European Union: Case study of a European Minimum Pension

While policies to eliminate poverty remain the responsibility of member states, the European Union may have a role to play in setting minimum standards. This paper explores the implications of a European Minimum Pension. A prototype Europe-wide tax benefit microsimulation model is used to examine the distributional impact of the reform, asking how far such a policy is 'targeted' on the poorest pensioners. We conclude that the formulation of policy for the protection of Europe's poorest people requires an appreciation not only of the situation of this group, but also of the assumptions that have been used to identify it.