An unconditional basic income in the family context: Labor supply and distributional effects
AbstractIn this paper we estimate the effects of an unconditional basic income on labor supply and income distribution with a special focus on the incentives to work in the family context. An unconditional basic income guarantees every citizen a minimum income without any means-testing. We simulate a proposed basic income reform with a detailed microsimulation model, estimate labor supply reactions with a structural labor supply model and perform distributional analysis using micro data from the German Socio-Economic Panel. As the originally proposed basic income concept yields a very high deficit, we also analyze two budget neutral alternatives. Comparing labor supply and distributional results of the budget neutral alternatives, the well-known equity-effciency trade-off is unveiled. In the family context our analyzes suggest that the unconditional character of the basic income causes increasing family incomes, but also serious disincentives to work for secondary earners. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 10-091.
Date of creation: 2010
Date of revision:
basic income; negative income tax; flat tax; female labor supply;
Find related papers by JEL classification:
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
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