Basic Income and Labor Supply: The German Case
AbstractThis paper deals with the effects of implementing a basic income on the labor supply side. The German welfare as well as tax and social contributions system are investigated. The results clarify that the abolishment of the so-called unemployment trap due to a basic income policy is a decisive advantage of this approach. In order to demonstrate possible labor supply side reactions to a basic income policy, we use the neoclassical labor supply model and adapt it for our purposes. We compare the effects of implementing a basic income on different types of employees concerning their consumption preferences. We show that, even in the neoclassical labor supply model without intrinsic work motivation, the basic income increases the participation rate in the labor market. Furthermore, current employees are partially incited to increase their labor supply. Therefore, a basic income would not only reduce unemployment but could also expand the magnitude of employment.
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Bibliographic InfoPaper provided by University of Paderborn, CIE Center for International Economics in its series Working Papers with number 54.
Length: 21 pages
Date of creation: Aug 2012
Date of revision:
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Postal: Warburger Str. 100, 33098 Paderborn
Web page: http://www.uni-paderborn.de/fakultaeten/wiwi/department4/cie/
More information through EDIRC
Basic Income; Neoclassical Labor Supply; Unemployment Trap;
Other versions of this item:
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-03 (All new papers)
- NEP-LAB-2012-09-03 (Labour Economics)
- NEP-LMA-2012-09-03 (Labor Markets - Supply, Demand, & Wages)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:CitEc Project, subscribe to its RSS feed for this item.
- B. Michael Gilroy & Mark Schopf & Anastasia Semenova, 2012. "Grundeinkommen und Arbeitsangebot: Die Perspektive Deutschlands," Working Papers 57, University of Paderborn, CIE Center for International Economics.
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