In the Netherlands, CPB often adopts the MIMIC model to explore the structural labour market implications of changes in the tax and social-insurance system. This applied general-equilibrium model combines microeconomic theory with a rich institutional detail and a firm empirical basis. This book describes the structure of MIMIC and discusses a large number of policy measures that have been proposed during the last five years. Moreover, it elaborates on proposals that are currently in discussion, such as the flat tax. To ease the understanding of the model, we also present a core version with only a few equations.
Part I: Introduction and Overview. Purpose and Method. MINI-MIMIC: A Core Representation of MIMIC. From MINI-MIMIC to MIMIC. Part II: Model Structure of MIMIC. Household Behaviour: Labour Supply and Consumption. Household Behaviour: Training and Job Search. Firm Behaviour. Equilibrium on the Labour Market. The Public Sector. Data Sources, Historical and Base Path and Reduced-Form Elasticities. Part III: Simulation Results. Across-the-Board Tax Policies. Earned Income Tax Credit. Vouchers and Payroll Tax Cuts for the Unskilled. Child Care Subsidies. MIMIC at Work: Tax Reform in the Netherlands. Simulation Results: Summing Up.