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The Redistributive Impact of Alternative Income Maintenance Schemes: A Microsimulation Study using Swiss Data

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Author Info
Abul Naga Ramses
Kolodziejczyk Christophe
Muller Tobias

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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% is required to make it viable. Aggregate work hours are reduced by approximately 10% and average disposable income falls by 9.3% under such circumstances. A participation income restricted to adults in employment and covering 50% of subsistence costs is however shown to result in an unambiguous social welfare improvement over the current situation in Switzerland.

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Publisher Info
Paper provided by Département d'Econométrie, Université de Genève in its series Cahiers du Département d'Econométrie with number 2007.03.

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Length: 51 pages
Date of creation: Jul 2007
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Handle: RePEc:gen:geneem:2007.03

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Related research
Keywords: income maintenance; negative income tax; microsimulation; income redistribution;

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Find related papers by JEL classification:
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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    Other versions:
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  12. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February. [Downloadable!] (restricted)
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