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Is ELIE a wasteful minimum income scheme?

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  • OOGHE, Erwin
  • SCHOKKAERT, Erik

Abstract

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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Suggested Citation

  • OOGHE, Erwin & SCHOKKAERT, Erik, 2010. "Is ELIE a wasteful minimum income scheme?," LIDAM Reprints CORE 2282, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2282
    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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    Cited by:

    1. Jean-Sébastien Gharbi & Yves Meinard, 2012. "Sur le sens du non welfarisme dans le modèle ELIE de redistribution des revenus de Kolm," AMSE Working Papers 1237, Aix-Marseille School of Economics, France.

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