IZAΨMOD, short for IZA Policy SImulation MODel, is the behavioral microsimulation model of the Institute for the Study of Labor (IZA). IZAΨMOD consists of three main components. The basis is a static microsimulation model for the German tax and benefit system. The second module is an econometrically estimated labor supply model, which takes into account behavioral reactions to tax reforms. The third component is a labor demand module, which completes the analysis of the labor market and allows a global assessment of the effects of policy measures. Components one and two are based on data from the German Socio-Economic Panel (GSOEP), a representative panel study of private households in Germany, whereas the demand module uses the German linked employer-employee data set LIAB.
The simulation steps of IZAΨMOD can be broadly described as follows:
1. The current tax system is simulated using the modified data. IZAΨMOD computes individual tax payments for each case in the sample considering gross incomes and deductions in detail. The individual results are multiplied by the individual sample weights to extrapolate the fiscal effects of the reform with respect to the whole population. The result of this simulation is the benchmark for different reform scenarios which are also modeled using the modified database. After applying the current tax and benefit system the disposable income is computed for each household. Based on these net incomes the distributional effects of the tax system at the status quo are assessed.
2. A discrete choice household labor supply model is applied to estimate consumption/leisure preferences of each household using the calculated net incomes and information on working hours.
3. The effects of tax and benefit reforms are analyzed. The reforms will change the net incomes of the households (first-round effect), which in a second step will induce labor supply reactions following the previously estimated consumption/leisure preferences which are assumed to be fix.
4. The labor demand module is employed to estimate how the labor supply reactions translate into employment effects.
Bargain, O., Immervoll, H., Peichl, A., Siegloch, S. (2010). Distributional Consequences of Labor Demand Adjustments to a Downturn: A Model-Approach with Application to Germany 2008-09 IZA DP No. 5220 / International Tax and Public Finance, 2012, 19 (1), 118-138
Bargain, O., Dolls, M., Neumann, D., Peichl, A., Siegloch, S. (2011). Tax-Benefit Systems in Europe and the US: Between Equity and Efficiency IZA DP No. 5440 / CESifo Working Paper 3534
Bargain, O., Orsini, k., Peichl, A. (2011). Labor Supply Elasticities in Europe and the US IZA DP No. 5820
Bargain, O., Dolls, M., Immervoll, H., Neumann, D., Peichl, A., Pestel, N., Siegloch, S. (2011). Tax Policy and Income Inequality in the U.S., 1978-2009: A Decomposition Approach IZA Discussion Paper No. 5910
Bargain, O., Decoster, A., Dolls, M., Neumann, D., Peichl, A., Siegloch, S. (2011). Welfare, Labor Supply and Heterogeneous Preferences: Evidence for Europe and the US IZA DP No. 6102
Basso, G., Dolls, M., Eichhorst, W., Leoni, T., Peichl, A. (2011). The Effects of the Recent Economic Crisis on Social Protection and Labour Market Arrangements across Socio-Economic Groups IZA Discussion Paper No. 6080
Bonin, H., Kempe, W. and Schneider, H. (2003). Kombilohn oder Workfare? Zur Wirksamkeit zweier arbeitsmarktpolitischer Strategien. IZA DP No. 587 / Quarterly Journal of Economic Research 72(1): 51-67
Bonin, H., Kempe, W. and Schneider H. (2002). Household Labor Supply Effects of Low-Wage Subsidies in Germany. IZA DP No. 637 / Journal of Applied Social Sciences Studies, 2003, 123 (1), 199-208
Bonin, H., Rinne, U. and Schneider, H. (2007). Untersuchung der beschäftigungs- und finanzpolitischen Auswirkungen des Bofinger/Walwei-Konzepts zur Neuordnung des Niedriglohnbereichs. IZA Research Report No. 11
Bonin, H. and Schneider H. (2005). Wohlfahrts- und Verteilungseffekte eines allgemeinen Freibetrags bei den Sozialabgaben. IZA DP No. 1490 / Journal for Labour Market Research, 2005, 38 (4), 475-492
Bonin, H. and Schneider, H. (2006). Workfare: Eine wirksame Alternative zum Kombilohn. IZA DP No. 2399
Bonin, H. and Schneider, H. (2007). Beschäftigungswirkungen und fiskalische Effekte einer Einführung des Solidarischen Bürgergelds. (available online)
Dolls, M., Fuest, C., Peichl, A. (2009). Automatic Stabilizers and Economic Crisis: US vs. Europe IZA DP No. 4310 / Journal of Public Economics, 2012, 96 (3-4), 279-294 / NBER Working Paper 16275
Dolls, M., Fuest, C., Peichl, A. (2010). Automatic Stabilizers, Economic Crisis and Income Distribution in Europe IZA DP No. 4917 / Research in Labor Economics, 2011, 32, 227-256
Eichhorst, W., Kendzia, M., Peichl, A., Pestel, N., Siegloch, S. and Tobsch, V. (2011). Aktivierung von Fachkräftepotenzialen: Frauen und Mütter IZA Research Report No. 39
Fuest, C., Peichl, A., Schaefer, T. (2007). Is a Flat Tax Feasible in a Grown-up Welfare State? IZA DP No. 3142 / International Tax and Public Finance, 2008, 15 (5), 620-636
Loeffler, M., Peichl, A., Pestel, N., Schneider, H., Siegloch, S. (2011). Einfach ist nicht immer gerecht: Eine Mikrosimulationsstudie der Kirchhof-Reform für die Einkommensteuer IZA Standpunkt Nr. 44
Neumann, D., Peichl, A., Schneider, H. and Siegloch, S. (2009). Die Steuerreformpläne der neuen Bundesregierung und das Bürgergeld: Eine Simulation von Risiken und Nebenwirkungen. IZA Standpunkt Nr. 21
Peichl, A. (2008). The Benefits of Linking CGE and Microsimulation Models: Evidence from a Flat Tax Analysis IZA DP No. 3715 / Journal of Applied Economics, 2009, 12 (2), 301-329
Peichl, A., Schaefer, T., Scheicher, C. (2008). Measuring Richness and Poverty: A Micro Data Application to Europe and Germany IZA Discussion Paper No. 3790 / Review of Income and Wealth, 2010, 56 (3), 597-619
Peichl, A., Schneider, H. und Siegloch, S. (2010). Reform der Hinzuverdienstregeln in der Grundsicherung: Kein Entkommen aus der Transferfalle. IZA Standpunkt Nr. 26
Peichl, A., Pestel, N., Schneider, H. und Siegloch, S. (2010). Alter Wein in neuen Schläuchen: Der Fünf-Stufen-Steuertarif der FDP auf dem Prüfstein. IZA Standpunkt Nr. 27
Peichl, A. and Siegloch, S. (2010). Accounting for Labor Demand Effects in Structural Labor Supply Models. IZA Discussion Paper No. 5350
Peichl, A., Pestel, N., Schneider, H., Siegloch, S. (2011). Bemessungsgrundlage schlägt Fünf-Stufen-Tarif: Eine Simulationsanalyse des Reformvorschlags nach Rose IZA Standpunkt Nr. 36 / Wirtschaftsdienst, 2011, 91(5), 328-332
Paulus, A., Peichl, A. (2008). Effects of Flat Tax Reforms in Western Europe on Income Distribution and Work Incentives IZA DP No. 3721 / Journal of Policy Modelling, 2009, 31 (5), 620-636
Schneider, H., Peichl, A., Pestel, N. und Siegloch, S. (2010). Gutachten zur Berechnung von Vorschlägen zur Neuregelung der Erwerbstätigenfreibeträge. IZA Research Report No. 32
