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Are Budget Neutral Income Floors Fiscally Viable in Sub-saharan Africa?

Author

Listed:
  • Nora Lustig

    (Stone Center for Latin American Studies, Department of Economics, Tulane University, Commitment to Equity Institute (CEQI))

  • Jon Jellema

    (CEQ Institute)

  • Valentina Martinez Pabon

Abstract

Using microsimulations, we assess whether budget neutral universal income floors are fiscally viable in twelve SSA countries. We consider three universal basic income (UBI) scenarios of decreasing levels of generosity: poverty line, average poverty gap, and current spending on transfers and subsidies per person (spending neutral). The viability of the policies is assessed by comparing the results on poverty and average tax rates obtained from the simulated scenarios with those in the current system (baseline). We find that poverty line and poverty gap UBI programs would not be viable. Spending neutral UBI programs could potentially be viable in Botswana, Ghana and Zambia. If resources are targeted to the poor, a poverty line scenario is viable in Botswana, Ghana, Namibia, and South Africa.

Suggested Citation

  • Nora Lustig & Jon Jellema & Valentina Martinez Pabon, 2021. "Are Budget Neutral Income Floors Fiscally Viable in Sub-saharan Africa?," Commitment to Equity (CEQ) Working Paper Series 86, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:86
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    Cited by:

    1. Hernandez, Carlos Ospino & Rigolini, Jamele & Coll-Black, Sarah & Oviedo, Ana Maria, 2023. "Protecting Who? Optimal Social Protection Responses to Shocks with Limited Information," IZA Policy Papers 205, Institute of Labor Economics (IZA).
    2. Habeenzu, Lennon Jambo, 2023. "Determinants of Inclusive Growth in Zambia," African Journal of Economic Review, African Journal of Economic Review, vol. 12(01), March.
    3. Nora Lustig & Valentina Martinez Pabon, 2022. "Universal Basic Income, Taxes, and the Poor," Working Papers 2205, Tulane University, Department of Economics.
    4. Ospino Hernandez,Carlos Gustavo & Rigolini,Iamele P. & Coll-Black,Sarah & Oviedo Silva,Ana Maria, 2023. "Protecting Who ? Optimal Social Protection Responses to Shocks with Limited Information," Policy Research Working Paper Series 10461, The World Bank.

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    More about this item

    Keywords

    universal basic incomes; fiscal policy; fiscal incidence; poverty; fiscal impoverishment; taxes; sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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