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Implications on the Proposed Basic Income Reform

In: A Feasible Basic Income Scheme for Germany

Author

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  • Maximilian Sommer

    (Catholic University Eichstaett-Ingolstadt)

Abstract

This chapter covers the estimated effects of the basic income proposal in Germany. By comparing the observed labor supply of the year 2010 with the estimated labor supply values of each individual after the policy reform, it is possible to identify and quantify the fiscal effects of the reform as well as the impact on income distribution. The implications of the proposed NIT-scheme for Germany are analyzed using a micro-simulation algorithm to mirror the German tax-and-transfer system. The chapter starts by introducing and discussing the GSOEP database that is used for the analysis. As information on income of the currently unemployed is necessary to simulate alternatives, their expected wage rates are estimated using a Heckman sample selection model. The data is then used to estimate multinomial logit regression models for singles and couples. The chapter continues by presenting the second-order effects with respect to labor supply that were triggered by the reform. This also includes a discussion about the feasibility of the approach. Afterwards, the attention shifts to the reform’s impact on social indicators especially on income poverty and income inequality with regard to different types of households. It ends with critical remarks of this procedure as well as of the limits of this study.

Suggested Citation

  • Maximilian Sommer, 2016. "Implications on the Proposed Basic Income Reform," Contributions to Economics, in: A Feasible Basic Income Scheme for Germany, edition 1, chapter 0, pages 133-174, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-24064-0_6
    DOI: 10.1007/978-3-319-24064-0_6
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