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Labor Supply Responses of Italian Women to Minimum Income Policies

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  • Anna Laura Mancini

    (Child - Collegio Carlo Alberto and University of Turin)

Abstract

Minimum income policies are policies aimed at guarantee all citizens with a minimum level of income and at fighting social exclusion typically associated with extreme poverty. Theoretically, their main shortcoming is the disincentive effect on labour market participation they could generate in the bottom part of income distribution, due to the high effective marginal tax rate they impose around the threshold level. This paper employs a structural labor supply model under discrete choices to test the existence and the magnitude of this disincentive effect on Italian female labor supply. Our empirical results show that family structure is crucial in determining the existence of a disincentive effect: only married women experience it, while single women participation rates increase under all possible minimum income schemes. The magnitude of both the positive and the negative effect depend on the policy design

Suggested Citation

  • Anna Laura Mancini, 2008. "Labor Supply Responses of Italian Women to Minimum Income Policies," Working Papers 94, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2008-94
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    Keywords

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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