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The Redistributive Impact of Alternative Income Maintenance Schemes: A Microsimulation Study using Swiss Data

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Listed:
  • Abul Naga Ramses
  • Kolodziejczyk Christophe
  • Muller Tobias

Abstract

Taking a benchmark scenario, the current situation in Switzerland, and using a microsimulation technique, we compare the effectiveness of various income maintenance schemes for reducing inequality and poverty. A full negative income tax allowance designed to eliminate poverty, is shown to reduce income inequality most drastically. An integrated federal linear tax rate of 62% is required to make it viable. Aggregate work hours are reduced by approximately 10% and average disposable income falls by 9.3% under such circumstances. A participation income restricted to adults in employment and covering 50% of subsistence costs is however shown to result in an unambiguous social welfare improvement over the current situation in Switzerland.

Suggested Citation

  • Abul Naga Ramses & Kolodziejczyk Christophe & Muller Tobias, 2007. "The Redistributive Impact of Alternative Income Maintenance Schemes: A Microsimulation Study using Swiss Data," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 2007.03, Institut d'Economie et Econométrie, Université de Genève.
  • Handle: RePEc:gen:geneem:2007.03
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    References listed on IDEAS

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    More about this item

    Keywords

    income maintenance; negative income tax; microsimulation; income redistribution;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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