Documentation Izaψmod: The IZA Policy Simulation Model
33 Pages Posted: 12 Apr 2010
This paper describes IZAΨMOD, the policy microsimulation model of the Institute for the Study of Labor (IZA). The model uses household microdata from the German Socio-Economic Panel Study and firm data from the German linked employer-employee dataset LIAB. IZAΨMOD consists of three components: First, a static module simulates the effects of a tax reform on the budget of the individual households. Secondly, behavioral labor supply responses are estimated. The third component distinguishes our model from most other microsimulation tools. A demand module takes into account possible restrictions of labor demand and identifies the partial equilibrium of the labor market after the supply reactions.
Keywords: IZAΨMOD, microsimulation, tax and benefit systems, labor demand
JEL Classification: D58, H20, J22, J23
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