Is ELIE a wasteful minimum income scheme?
ELIE can be interpreted as a minimum income scheme, financed by lump-sum taxes. It may induce social waste as individuals with a low taste for working may opt for voluntary unemployment. We simulate the magnitude of this social waste with microdata for Belgium and compare ELIE with a firstbest scheme and a second-best scheme (based on a linear income tax), implementing the same minimum income. As expected, the social waste induced by ELIE is intermediate between the social waste induced by the first- and second-best schemes. Assumptions about the preferences of the voluntarily unemployed play a crucial role.
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|Note:||In : Chapter 8 in C. Gamel and M. Lubrano (eds.), On Kolm's Theory of Macrojsutice. A Pluridisciplinary Forum of Exchange. Heidelberg, Springer, 235-255, 2010|
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