Economic and Econometric Models

In recent years considerable effort has been devoted to improving the methodological quality of the applied research of the institute in the field of economics. To this end resources have been invested in the development and extension of economic and econometric models. The following models and tools are currently available and are used regularly for projects of the institute in the field of economics:

ITABENA

ITABENA is a tax-benefit-microsimulation model for Austria which was constructed by the IHS in 2003-2005 (IHS TAx-BENefit Model for Austria). It has, since then, been constantly maintained and updated, and served as a basis for a wide range of policy evaluations. It models the Austrian tax-benefit system and primarily calculates the disposable income of Austrian individuals and households. The model is based on a representative micro-data set, the Austrian version of the EU-SILC 2004-2021 (EU-Community Statistics on Income and Living Conditions). This annual survey contains information on individual and household characteristics as well as detailed information on gross incomes from various sources. The information is used to reproduce, step by step, the elements of the Austrian tax-benefit system, including income taxes, social security contributions, family allowances, parental leave benefits, social assistance and so forth. ITABENA accounts for every tax or benefit which is relevant for the composition of the disposable income of a household or an individual perspective, therefore a detailed representation of a given household’s income components can be delivered. Moreover, the model allows for the implementation of counterfactual taxes and benefits so as to evaluate ex-ante the distributional effects of a given reform proposal. These effects can be analysed for different groups, e.g. income quantiles, household composition, age, gender or any other socio-economic characteristic.
Please contact the Research Group European Union, Public Finance and Labor Market for more information.

ILSA

ILSA is a structural discrete choice labour supply model for Austria (IHS-Labour-Supply-Model-for-Austria). It views labour supply decisions of individuals and couples as an optimal choice from a discrete set of working hours categories. For couples, a joint utility function is assumed. Using a multinominal logit model the structural parameters of the underlying utility function are estimated. Based on these estimates the labour supply response to a given change in disposable income can be quantified, and second round distributional effects can be evaluated. ILSA is based on pooled cross-sectional data from several waves of the EU-SILC and makes use of the microsimulation capabilities of ITABENA in order to calculate counterfactual disposable incomes.
Please contact the Research Group European Union, Public Finance and Labor Market for more information.

IREA

IREA is the IHS-Micro-Simulation-Model-for-REtirement-Behaviour-in-Austria. It is a microsimulation model of the Austrian pension system which enables us to calculate individual retirement benefits and forward-looking incentive measures (social security wealth, accrual rates, peak values and option values) for an extensive sample of new retirees. It builds on comprehensive merged data from administrative Austrian Social Security Data (Arbeitsmarktdatenbank AMDB) which contains social security information from the central federation of the Austrian Social Insurance Agency (Hauptverband der österreichischen Sozialversicherungsträger) and the Public Employment Service (Arbeitsmarktservice Österreich) and the condensated insurance-periods and pension calculation dataset (Verdichtung von Versicherungszeiten und Pensionsberechnung VVP) which contains detailed information on individual pensions and insurance histories from the Public Pension Insurance Institution (Pensionsversicherungsanstalt). IREA allows for a wide range of relevant policy simulations, including the evaluation of counterfactual reforms of pension legislation.
Please contact the Research Group European Union, Public Finance and Labor Market for more information.

TaxLab

TaxLab, a computable general equilibrium model developed at the IHS since 2004, is used to analyse and quantify the macroeconomic impacts of policy reforms related to the labour market, the pension system and taxes. It covers Austria and 13 other countries of the European Union, either separately or together in a multi-country version. The model has an overlapping-generations structure with 1 production sector, a household sector with 8 different age classes and 3 skill levels, which takes population aging into account. Households and firms in the model react to economic circumstances and policy changes, and their behaviours define wage and unemployment levels. Households choose their education level, their consumption, labour market participation, job search effort if unemployed and working hours if employed, as well as retirement date, while firms make investment and hiring decisions. Government raises taxes and social security contributions to pay for welfare benefits, unemployment insurance, pensions, health services and other public expenditures. There are versions of TaxLab with migration, informal labour and capital-funded pensions.
Please contact the Research Group European Union, Public Finance and Labor Market for more information.

Environmentally extended multiregional Input-Output-Models

At the IHS, three environmentally extended multiregional input-output models have been developed. The first describes the intersectoral and interregional linkages of the Austrian economy on the level of federal states, the other two cover the World economy on the level of 45 resp. 65 countries (+rest of the world). All models were extended at the IHS by climate and environment indicators.

These models enable us to quantify the short- and medium-term economic and ecologic impact of political measures, investment projects, entire industries, companies or various other private and public individual institutions on regional, national and international value added, employment, tax revenues, on climate and on the environment. They also provide information on the industries that benefit the most from expenditures and investments. Using these models, the entire value chain can be depicted. In addition to direct effects, indirect and induced effects can be calculated. Direct effects are impacts that immediately arise from the analysed measures in the initially affected sectors. In contrast, indirect effects are defined as those generated by suppliers (and their suppliers along the value-added chain). Finally, induced effects comprise consumption- and investment-induced effects. Consumption-induced effects describe the economic impact caused by the consumption emerging from the income of directly and indirectly employed, and investment-induced effects are effects in upstream industries triggered by investment expenditures due to higher economic activity.

The multiregional input-output model for Austria is based on the national input-output tables published on an annual basis by Statistics Austria. The IHS disaggregates these tables into nine regional tables, one for each Austrian federal province, which depict the intraregional links (showing flows within a region) at the sectoral level. Additionally, the interregional links (i.e., flows between different regions) are constructed, resulting in the Multiregional Input-Output-Table for Austria. The model therefore allows to evaluate the effects for each federal state individually. The environmentally extended multiregional input-output model for the World is based on the FIGARO tables of Eurostat, another one on the Inter-Country-Input-Output-Tables of the OECD.

Please contact the Research Group Regional Science and Environmental Research for more information.

EAR

quantifies the impact of improvements in the quality of the transport infrastructure on regional added value and employment

MERCI

focuses on the electrical system and environment

LEMMA

concentrates on the labour market, featuring a disaggregated household sector according to skill leveles

LIMA

is a structural macroeconometric model which is in particular used to generate he regular economic forecasts for Austria

Structural Macroeconomic Models

A structural macroeconometric model for some successor states of the former Yugoslavia (Slovenia, Serbia, Croatia, Bosnia and Herzegovina)

A structural macroeconometric model for Carinthia which is used to generate regular economic forecasts for the Austria province of Carinthia