The Redistributive Impact of Alternative Income Maintenance Schemes: A Microsimulation Study Using Swiss Data

27 Pages Posted: 13 May 2008

See all articles by Ramses H. Abul Naga

Ramses H. Abul Naga

University of Bath - Department of Economics

Christophe Kolodziejczyk

Amternes og Kommunernes Forskningsinstitut (AKF)

Tobias Müller

University of Geneva - Geneva School of Economics and Management

Abstract

Taking a benchmark scenario, the current situation in Switzerland, and using a microsimulation technique, we compare the effectiveness of various income maintenance schemes for reducing inequality and poverty. A full negative income tax allowance designed to eliminate poverty is shown to reduce income inequality most drastically. An integrated federal linear tax rate of 62 percent is required to make it viable. Aggregate work hours are reduced by approximately 10 percent and average disposable income falls by 9.3 percent under such circumstances. A participation income restricted to adults in employment and covering 50 percent of subsistence costs is however shown to result in an unambiguous social welfare improvement over the current situation in Switzerland.

Suggested Citation

Abul Naga, Ramses H. and Kolodziejczyk, Christophe and Müller, Tobias, The Redistributive Impact of Alternative Income Maintenance Schemes: A Microsimulation Study Using Swiss Data. Review of Income and Wealth, Vol. 54, No. 2, pp. 193-219, June 2008. Available at SSRN: https://ssrn.com/abstract=1131487 or http://dx.doi.org/10.1111/j.1475-4991.2008.00270.x

Ramses H. Abul Naga

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Christophe Kolodziejczyk

Amternes og Kommunernes Forskningsinstitut (AKF) ( email )

Nyropsgade 32
Copenhagen V, 1602
Denmark

Tobias Müller (Contact Author)

University of Geneva - Geneva School of Economics and Management ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 379 8238 (Phone)

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