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.
|Date of creation:||Mar 2008|
|Date of revision:|
|Contact details of provider:|| Postal: Naamsestraat 69, 3000 Leuven|
Phone: +32-(0)16-32 67 25
Fax: +32-(0)16-32 67 96
Web page: http://www.econ.kuleuven.be/ew
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ete:ceswps:ces0805. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karla Vander Weyden)
If references are entirely missing, you can add them using this form.