Advanced Search
MyIDEAS: Login to save this article or follow this journal

Alternative Basic Income Mechanisms: An Evaluation Exercise With a Microeconometric Model

Contents:

Author Info

  • Colombino Ugo

    (University of Torino and Collegio Carlo Alberto)

  • Locatelli Marilena

    (University of Torino)

  • Narazani Edlira

    (University of Torino)

  • O'Donoghue Cathal

    (Rural Economy Research Centre)

Abstract

We develop and estimate a microeconometric model of household labour supply in four European countries with differing economies and welfare policy regimes: Denmark, Italy, Portugal and the United Kingdom. We then simulate, under the constraint of constant total net-tax revenue (fiscal neutrality), the effects of various hypothetical tax-transfer-reform basic-income policies: Guaranteed Minimum Income, Work Fare, Participation Basic Income and Universal Basic Income. We produce indexes and criteria by which the reforms can be ranked and compared to current tax-transfer systems. The exercise can be considered as one of empirical optimal taxation, where the optimization problem is solved computationally rather than analytically. Many versions of basic income policies would be superior to the current system, and the most successful are not means-tested (Universal or Participation Basic Income) and adopt progressive tax rules. If constraints other than fiscal neutrality are considered, such as the implied top marginal tax rate or the effect on female labour supply, the picture changes: unconditional policies remain optimal and feasible in Denmark and the United Kingdom; while in Italy and Portugal universal policies appear instead to be too costly in implied top marginal tax rates and adverse effects on female participation – conditional policies such as Work Fare emerge as more desirable there.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.degruyter.com/view/j/bis.2010.5.1/bis.2010.5.1.1162/bis.2010.5.1.1162.xml?format=INT
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by De Gruyter in its journal Basic Income Studies.

Volume (Year): 5 (2010)
Issue (Month): 1 (September)
Pages: 1-31

as in new window
Handle: RePEc:bpj:bistud:v:5:y:2010:i:1:n:3

Contact details of provider:
Web page: http://www.degruyter.com

Order Information:
Web: http://www.degruyter.com/view/j/bis

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Fortin, Bernard & Truchon, Michel & Beausejour, Louis, 1993. "On reforming the welfare system : Workfare meets the negative income tax," Journal of Public Economics, Elsevier, vol. 51(2), pages 119-151, June.
  2. Richard Blundell & Andrew Shephard, 2008. "Employment, hours of work and the optimal taxation of low income families," IFS Working Papers W08/01, Institute for Fiscal Studies.
  3. John Creedy & Guyonne Kalb, 2003. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Treasury Working Paper Series 03/20, New Zealand Treasury.
  4. Ugo Colombino & Rolf Aaberge & Tom Wennemo, 2005. "Evaluating Alternative Representations of the Choice Sets in Models of Labour Supply," Econometrics 0510001, EconWPA.
  5. Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November.
  6. Duncan, Alan & Giles, Christopher, 1996. "Labour Supply Incentives and Recent Family Credit Reforms," Economic Journal, Royal Economic Society, vol. 106(434), pages 142-55, January.
  7. Emmanuel Saez, 2002. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 1039-1073, August.
  8. Immervoll, Herwig & Kleven, Henrik & Kreiner, Claus Thustrup & Saez, Emmanuel, 2004. "Welfare Reform in European Countries: A Micro-Simulation Analysis," CEPR Discussion Papers 4324, C.E.P.R. Discussion Papers.
  9. Peter Haan & Katharina Wrohlich, 2007. "Optimal Taxation: The Design of Child Related Cash- and In-Kind-Benefits," Discussion Papers of DIW Berlin 737, DIW Berlin, German Institute for Economic Research.
  10. Ricardo Varsano & Kevin Kim & Michael Keen, 2006. "The "Flat Tax(es)"," IMF Working Papers 06/218, International Monetary Fund.
  11. Ugo Colombino & Rolf Aaberge, 2006. "Designing Optimal Taxes with a Microeconometric Model of Household Labour Supply," CHILD Working Papers wp20_06, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  12. Tuomala, Matti, 1990. "Optimal Income Tax and Redistribution," OUP Catalogue, Oxford University Press, number 9780198286059.
  13. François Bourguignon & Amadéo Spadaro, 2005. "Microsimulation as a tool for evaluating redistribution policies," PSE Working Papers halshs-00590863, HAL.
  14. Standing Guy, 2008. "How Cash Transfers Promote the Case for Basic Income," Basic Income Studies, De Gruyter, vol. 3(1), pages 1-30, July.
  15. Richard Blundell & Mike Brewer & Peter Haan & Andrew Shephard, 2009. "Optimal Income Taxation of Lone Mothers: An Empirical Comparison of the UK and Germany," Economic Journal, Royal Economic Society, vol. 119(535), pages F101-F121, 02.
  16. Colombino, Ugo, 1998. "Evaluating the effects of new telephone tariffs on residential users' demand and welfare. A model for Italy," Information Economics and Policy, Elsevier, vol. 10(3), pages 283-303, September.
  17. Sen, Amartya K, 1976. "Real National Income," Review of Economic Studies, Wiley Blackwell, vol. 43(1), pages 19-39, February.
  18. Roed, Knut & Strom, Steinar, 2002. " Progressive Taxes and the Labour Market: Is the Trade-Off between Equality and Efficiency Inevitable?," Journal of Economic Surveys, Wiley Blackwell, vol. 16(1), pages 77-110, February.
  19. Rolf Aaberge, 2007. "Gini’s nuclear family," Journal of Economic Inequality, Springer, vol. 5(3), pages 305-322, December.
  20. Aaberge, Rolf & Colombino, Ugo & Strom, Steinar, 1999. "Labour Supply in Italy: An Empirical Analysis of Joint Household Decisions, with Taxes and Quantity Constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(4), pages 403-22, July-Aug..
  21. Meade, James E, 1972. "Poverty in the Welfare State," Oxford Economic Papers, Oxford University Press, vol. 24(3), pages 289-326, November.
  22. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Basic income vs capitalism
    by chris dillow in Stumbling and Mumbling on 2013-07-02 13:34:26
  2. Why not a basic income?
    by chris dillow in Stumbling and Mumbling on 2013-10-16 11:50:15
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bpj:bistud:v:5:y:2010:i:1:n:3. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.