Is ELIE a Wasteful Minimum Income Scheme?

17 Pages Posted: 4 Mar 2008

See all articles by Erwin Ooghe

Erwin Ooghe

Catholic University of Leuven (KUL) - Center for Economic Studies

Erik Schokkaert

Catholic University of Leuven (KUL)

Date Written: February 2008

Abstract

ELIE can be interpreted as a minimum income scheme, financed by lump-sum taxes. It may induce social waste as individuals with a low taste for working may opt for voluntary unemployment. We simulate the magnitude of this social waste with micro-data for Belgium and compare ELIE with a first best scheme and a second-best scheme (based on a linear income tax), implementing the same minimum income. As expected, the social waste induced by ELIE is intermediate between the social waste induced by the first- and second-best schemes. Assumptions about the preferences of the voluntarily unemployed play a crucial role.

Suggested Citation

Ooghe, Erwin and Schokkaert, Erik, Is ELIE a Wasteful Minimum Income Scheme? (February 2008). Available at SSRN: https://ssrn.com/abstract=1101352 or http://dx.doi.org/10.2139/ssrn.1101352

Erwin Ooghe (Contact Author)

Catholic University of Leuven (KUL) - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Erik Schokkaert

Catholic University of Leuven (KUL) ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
35
Abstract Views
356
PlumX Metrics