We develop and estimate a microeconometric model of household labour supply in four European countries representative of different economies and welfare policy regimes: Denmark, Italy, Portugal and United Kingdom. We then simulate, under the constraint of constant total net tax revenue, the effects of 10 hypothetical tax-transfer reforms which include various alternative versions of a Basic Income policy. We produce various indexes and criteria according to which the reforms can be ranked. The exercise can be considered as one of empirical optimal taxation, where the optimization problem is solved computationally rather than analytically. As long as the ranking of reforms is done according to welfaristic criteria it turns out that the most successful policies are those involving non means-tested versions of basic income and adopting progressive tax-rules. When other criteria (such as the implied top marginal tax rate or the effect on female labour supply) are also taken into account, the picture changes: universalistic policies remain optimal and feasible in countries like Denmark where female participation rates are very high; instead, in countries with low female participation rates (like Italy) universalistic policies appear to be too costly in terms of implied top marginal tax rates and in terms of adverse effects on female participation, and means-tested policies such as Work-Fare or Negative Income Tax seem more desirable.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. 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.
Publisher Info
Paper provided by EUROMOD at the Institute for Social and Economic Research in its series EUROMOD Working Papers with number
EM5/08.
Length: Date of creation: 01 Jul 2008 Date of revision: Handle: RePEc:ese:emodwp:em5/08
Note: Basic Income, Minimum Guaranteed Income, Models of Labour Supply, Tax Reforms, Welfare Evaluation Contact details of provider: Postal: RAB Butler Building, University of Essex, Wivenhoe Park, Colchester, ESSEX C04 3SQ Phone: +44 (0)1206 872957 Fax: +44 (0)1206 873151 Email: Web page: http://www.iser.essex.ac.uk/research/euromod/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Paul Groves).
Find related papers by JEL classification: C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
This paper has been announced in the following NEP Reports:
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.:
Cited by: (explanations, 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.)
Did you know? You can create a compilation of all publications of a group of people, say alumni of a program, your students or memers of an association.