In this paper we analyze the effects of Minimum Guaranteed Income (MGI) schemes on labour supply of Italian married couples by applying a behavioural micro-simulation tax-benefit model. The Tax-Benefit Model applied is the static micro-simulation model of EUROMOD. A household labour supply model is simulated with different tax rules where MGI is an option. The simulated tax regimes are Negative Income Tax (NIT), Workfare Tax (WF) and Universal Basic Income (UBI). These exercises of behavioural micro-simulation tax-benefit are performed at national and regional level. Our main finding is that changes in labour supply due to these tax-transfer rules are small and this is in favour of such income support policies. Concerning tax-transfer rules without hourÃs constraint, such as UBI and NIT, they imply labour disincentives more in the South than in the North of the country, and the effect is amplified with the increase of generosity level. Considering the welfare effects of these tax-transfer rules, we find that there are more ìwinnersî than ìlosersî in the south than in the north as there are more households participating in these MGI schemes due to their low income status.
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Paper provided by EUROMOD at the Institute for Social and Economic Research in its series EUROMOD Working Papers with number
EM6/08.
Length: Date of creation: 01 Jul 2008 Date of revision: Handle: RePEc:ese:emodwp:em6/08
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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
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