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Towards A Green Income Support Policy: Investigating Social and Fiscal Alternatives for Turkey

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  • Dogan, Berna
  • Tekgüç, Hasan
  • Yeldan, A. Erinç

Abstract

The limited success of employment-based social protection measures under the diverging patterns of post-covid recovery rekindled the interest in a social policy framework known as the Basic Income (BI) support. The goal of this study is to assess the macroeconomic feasibility of a BI policy for Turkey with a green design. We test the potential of the BI program using five alternative scenarios distinguished by coverage of the receivers and their respective fiscal costs. We then employ an applied general equilibrium model to analyze the economy-wide effects and welfare implications for Turkey in the long-run through 2030. The dynamic macro results of our modeling effort indicate that BI has the potential for a significant social welfare enhancing impact for Turkey; yet, pursuing the BI mandate without any compensating fiscal consolidation is not manageable in the medium to longer run. To achieve the warranted policy space we evaluate the macroeconomic and welfare effects of an alternative fiscal program comprising of (i) carbon tax levied on the fossil fuel producing industry, (ii) corporate income taxation policy reform that aims at expanding the revenue base and consolidation of the fiscal space of the government, and (iii) re-structuring of public consumption expenditures by introducing rationality and efficiency in the structure of fiscal expenditures. Our model solutions reveal that a green BI scenario not only achieves a higher GDP and welfare in the medium to long run, but also helps Turkey to reduce its carbon emissions in line with the global policy challenges of a green recovery.

Suggested Citation

  • Dogan, Berna & Tekgüç, Hasan & Yeldan, A. Erinç, 2022. "Towards A Green Income Support Policy: Investigating Social and Fiscal Alternatives for Turkey," Conference papers 333496, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333496
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