Alternative Basic Income Mechanisms: An Evaluation Exercise With a Microeconometric Model
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Ugo Colombino
We develop and estimate a microeconometric model of household labour supply in four European countries with differing economies and welfare policy regimes: Denmark, Italy, Portugal and the United Kingdom. We then simulate, under the constraint of constant total net-tax revenue (fiscal neutrality), the effects of various hypothetical tax-transfer-reform basic-income policies: Guaranteed Minimum Income, Work Fare, Participation Basic Income and Universal Basic Income. We produce indexes and criteria by which the reforms can be ranked and compared to current tax-transfer systems. The exercise can be considered as one of empirical optimal taxation, where the optimization problem is solved computationally rather than analytically. Many versions of basic income policies would be superior to the current system, and the most successful are not means-tested (Universal or Participation Basic Income) and adopt progressive tax rules. If constraints other than fiscal neutrality are considered, such as the implied top marginal tax rate or the effect on female labour supply, the picture changes: unconditional policies remain optimal and feasible in Denmark and the United Kingdom; while in Italy and Portugal universal policies appear instead to be too costly in implied top marginal tax rates and adverse effects on female participation – conditional policies such as Work Fare emerge as more desirable there.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Articles in the same Issue
- Front Matter
- Content
- List of Contributors
- Research Article
- Alternative Basic Income Mechanisms: An Evaluation Exercise With a Microeconometric Model
- Why Cash Violates Neutrality
- Near-Universal Basic Income
- Research Note
- The Right to Existence in Developing Countries: Basic Income in East Timor
- Baby Steps: Basic Income and the Need for Incremental Organizational Development
- Book Review
- Review of Alanna Hartzok, The Earth Belongs to Everyone
Articles in the same Issue
- Front Matter
- Content
- List of Contributors
- Research Article
- Alternative Basic Income Mechanisms: An Evaluation Exercise With a Microeconometric Model
- Why Cash Violates Neutrality
- Near-Universal Basic Income
- Research Note
- The Right to Existence in Developing Countries: Basic Income in East Timor
- Baby Steps: Basic Income and the Need for Incremental Organizational Development
- Book Review
- Review of Alanna Hartzok, The Earth Belongs to Everyone
