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The Redistributive Impact Of Alternative Income Maintenance Schemes: A Microsimulation Study Using Swiss Data

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  • Ramses H. Abul Naga
  • Christophe Kolodziejczyk
  • Tobias Müller

Abstract

Taking a benchmark scenario, the current situation in Switzerland, and using a microsimulation technique, we compare the effectiveness of various income maintenance schemes for reducing inequality and poverty. A full negative income tax allowance designed to eliminate poverty is shown to reduce income inequality most drastically. An integrated federal linear tax rate of 62 percent is required to make it viable. Aggregate work hours are reduced by approximately 10 percent and average disposable income falls by 9.3 percent under such circumstances. A participation income restricted to adults in employment and covering 50 percent of subsistence costs is however shown to result in an unambiguous social welfare improvement over the current situation in Switzerland. Copyright 2008 The Authors. Journal compilation International Association for Research in Income and Wealth 2008.

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Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

Volume (Year): 54 (2008)
Issue (Month): 2 (06)
Pages: 193-219

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Handle: RePEc:bla:revinw:v:54:y:2008:i:2:p:193-219

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Cited by:
  1. Brigitte Baalen & Tobias Müller, 2014. "Social welfare effects of tax-benefit reform under endogenous participation and unemployment: an ordinal approach," International Tax and Public Finance, Springer, Springer, vol. 21(2), pages 198-227, April.
  2. Mery Ferrando & Cristian Pérez Muñoz & Gonzalo Salas, 2013. "Impuestos negativos a la renta en Uruguay: ¿una política redistributiva alternativa?," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.

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