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An unconditional basic income in the family context: Labor supply and distributional effects

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  • Horstschräer, Julia
  • Clauss, Markus
  • Schnabel, Reinhold

Abstract

In this paper we estimate the effects of an unconditional basic income on labor supply and income distribution with a special focus on the incentives to work in the family context. An unconditional basic income guarantees every citizen a minimum income without any means-testing. We simulate a proposed basic income reform with a detailed microsimulation model, estimate labor supply reactions with a structural labor supply model and perform distributional analysis using micro data from the German Socio-Economic Panel. As the originally proposed basic income concept yields a very high deficit, we also analyze two budget neutral alternatives. Comparing labor supply and distributional results of the budget neutral alternatives, the well-known equity-effciency trade-off is unveiled. In the family context our analyzes suggest that the unconditional character of the basic income causes increasing family incomes, but also serious disincentives to work for secondary earners.

Suggested Citation

  • Horstschräer, Julia & Clauss, Markus & Schnabel, Reinhold, 2010. "An unconditional basic income in the family context: Labor supply and distributional effects," ZEW Discussion Papers 10-091, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:10091
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    References listed on IDEAS

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    1. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
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    Cited by:

    1. Ugo Colombino, 2019. "Is unconditional basic income a viable alternative to other social welfare measures?," IZA World of Labor, Institute of Labor Economics (IZA), pages 128-128, March.
    2. Cremer, Helmuth & Roeder, Kerstin, 2015. "Means testing versus basic income: The (lack of) political support for a universal allowance," Economics Letters, Elsevier, vol. 136(C), pages 81-84.
    3. Robin Jessen & Davud Rostam-Afschar & Viktor Steiner, 2017. "Getting the Poor to Work: Three Welfare-Increasing Reforms for a Busy Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 73(1), pages 1-41, March.
    4. Islam, Nizamul & Colombino, Ugo, 2018. "The case for NIT+FT in Europe. An empirical optimal taxation exercise," Economic Modelling, Elsevier, vol. 75(C), pages 38-69.
    5. Henk-Wim Boer & Egbert L. W. Jongen, 2023. "Analysing tax-benefit reforms in the Netherlands using structural models and natural experiments," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(1), pages 179-209, January.
    6. Habermacher, Florian & Kirchgässner, Gebhard, 2013. "Das garantierte Grundeinkommen: Eine (leider) nicht bezahlbare Idee," Economics Working Paper Series 1313, University of St. Gallen, School of Economics and Political Science, revised Aug 2013.
    7. Day, Creina, 2022. "Increasing inequality and voting for basic income: Could gender inequality worsen?," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 476-487.
    8. Gubello, Michele, 2024. "Social trust and the support for universal basic income," European Journal of Political Economy, Elsevier, vol. 81(C).
    9. Rolf Aaberge & Ugo Colombino, 2018. "Structural Labour Supply Models and Microsimulation," International Journal of Microsimulation, International Microsimulation Association, vol. 11(1), pages 162-197.
    10. de Boer, Henk-Wim & Jongen, Egbert L. W., 2020. "Analysing Tax-Benefit Reforms in the Netherlands: Using Structural Models and Natural Experiments," IZA Discussion Papers 12892, Institute of Labor Economics (IZA).
    11. Ugo Colombino, 2015. "Five Crossroads on the Way to Basic Income. An Italian Tour," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(3), pages 353-389, November.
    12. Raddatz, Guido, 2019. "Das bedingungslose Grundeinkommen – ein Luftschloss," Zeitthemen 02, Stiftung Marktwirtschaft / The Market Economy Foundation, Berlin.
    13. Palermo Kuss Ana Helena & Neumärker K. J. Bernhard, 2018. "Modelling the Time Allocation Effects of Basic Income," Basic Income Studies, De Gruyter, vol. 13(2), pages 1-15, December.
    14. Honkanen Pertti, 2014. "Basic Income and Negative Income Tax: A Comparison with a Simulation Model," Basic Income Studies, De Gruyter, vol. 9(1-2), pages 119-135, December.
    15. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis, in: Handbook of Microsimulation Modelling, volume 127, pages 167-221, Emerald Group Publishing Limited.
    16. Magnani, Riccardo & Piccoli, Luca, 2020. "Universal basic income with flat tax reform in France," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 235-249.
    17. Nizamul Islam & Ugo Colombino, 2018. "The case for negative income tax with flat tax in Europe. An empirical optimal taxation exercise," Working Papers 454, ECINEQ, Society for the Study of Economic Inequality.

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    More about this item

    Keywords

    basic income; negative income tax; flat tax; female labor supply;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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