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The impact of a "Minimum Guaranteed Income Program" in Portugal

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  • Miguel Gouveia
  • Carlos Farinha Rodrigues

Abstract

The objective of this paper is to estimate the impact of the Portuguese Minimum Guaranteed Income Program (RMIG). We estimate its impact on the distribution of household incomes and poverty as well as the size of government expenditures necessary to finance the program. The baseline adopted is constructed under the assumption of no behavioural responses to the transfer mechanism and of total participation of all eligible households. The simulation shows that 4,8% of domestic households and 5,7% of the population are eligible to receive the RMIG. The Program has a small but positive impact in reducing inequality. However, taking labour supply effects into account results in a smaller gain in inequality reduction. Similarly, we have a small but positive impact on the poverty rate for individuals. This gain, however, is almost cancelled when labour supply reactions are taken into account. However the most important consequences of the RMIG are sharp gains in the measures of poverty sevefity and intensity. In these dimensions, taking into account the labour supply incentives of the RMIG does not reduce substantially the positive impacts of the Program.

Suggested Citation

  • Miguel Gouveia & Carlos Farinha Rodrigues, 1999. "The impact of a "Minimum Guaranteed Income Program" in Portugal," Working Papers Department of Economics 1999/03, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp31999
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    File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp31999.pdf
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    References listed on IDEAS

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    1. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
    2. Jerry A. Hausman & David A. Wise, 1985. "Social Experimentation," NBER Books, National Bureau of Economic Research, Inc, number haus85-1, January.
    3. Alicia H. Munnell, 1987. "Lessons from the income maintenance experiments: an overview," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 32-45.
    4. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
    5. Burtless, Gary & Hausman, Jerry A, 1978. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiments," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1103-1130, December.
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    Cited by:

    1. Alvaredo, Facundo, 2009. "Top incomes and earnings in Portugal 1936-2005," Explorations in Economic History, Elsevier, vol. 46(4), pages 404-417, October.
    2. Anna Laura Mancini, 2007. "Labor supply responses of Italian women to minimum income policies," CHILD Working Papers wp14_07, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    3. de la Rica, Sara & Gorjón, Lucía, 2017. "Assessing the Impact of a Minimum Income Scheme in the Basque Country," IZA Discussion Papers 10867, Institute for the Study of Labor (IZA).
    4. Carlos Farinha Rodrigues, 2001. "Anti-poverty effectiveness and efficiency of the Guaranteed Minimum Income Programme in Portugal," Working Papers Department of Economics 2001/08, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    5. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," PSE Working Papers halshs-00586795, HAL.
    6. Maria Cidália Queiroz & Marrielle Christine Gros, 2012. "Social Insertion Income: the contribution of the association Qualificar para Incluyir towards enhancing this policy," Notas Económicas, Faculty of Economics, University of Coimbra, issue 35, pages 59-73, June.
    7. Carlos Farinha Rodrigues, 2004. "The Redistributive Impact of the Guaranteed Minimum Income Programme in Portugal," Working Papers Department of Economics 2004/09, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    8. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," Working Papers halshs-00586795, HAL.
    9. Budria, Santiago, 2007. "Economic Inequality in Portugal: A Picture in the Beginnings of the 21st century," MPRA Paper 1784, University Library of Munich, Germany.

    More about this item

    Keywords

    Income Distribution; Inequality; Poverty Alleviation; Social Policy;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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