An Unconditional Basic Income in the Family Context - Labor Supply and Distributional Effects

28 Pages Posted: 16 Jan 2011

See all articles by Julia Horstschräer

Julia Horstschräer

ZEW – Leibniz Centre for European Economic Research

Markus Clauss

ZEW – Leibniz Centre for European Economic Research

Reinhold Schnabel

affiliation not provided to SSRN

Date Written: 2010

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-efficiency 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.

Keywords: Basic income, negative income tax, at tax, female labor supply

JEL Classification: C15, D31, D78, H31, H53, J08, J22

Suggested Citation

Horstschräer, Julia and Clauss, Markus and Schnabel, Reinhold, An Unconditional Basic Income in the Family Context - Labor Supply and Distributional Effects (2010). ZEW - Centre for European Economic Research Discussion Paper No. 10-091. Available at SSRN: https://ssrn.com/abstract=1739721 or http://dx.doi.org/10.2139/ssrn.1739721

Julia Horstschräer (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Markus Clauss

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Reinhold Schnabel

affiliation not provided to SSRN ( email )

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