Means Testing Versus Basic Income: The (Lack of) Political Support for a Universal Allowance

14 Pages Posted: 13 Jul 2015

See all articles by Helmuth Cremer

Helmuth Cremer

University of Toulouse (GREMAQ & IDEI); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Kerstin Roeder

Ludwig Maximilian University of Munich (LMU); University of Augsburg

Multiple version iconThere are 2 versions of this paper

Date Written: July 2015

Abstract

This paper studies the political economy of a basic income (BI) versus a means tested welfare scheme. We show in a very simple setting that if society votes on the type of system, its generosity as well as the 'severity' of means testing (if any), a BI system could only emerge in the political equilibrium under very strong and empirically implausible conditions. Instead, the political process leads to a means tested system. The necessity to draw political support does affect the design of the system, but it only implies that means testing becomes less severe so that benefits are extended also to the middle classes. However, a fully universal system is rejected by a majority.

Keywords: basic income, means testing, political support

JEL Classification: D3, D7, H2, H5

Suggested Citation

Cremer, Helmuth and Roeder, Kerstin, Means Testing Versus Basic Income: The (Lack of) Political Support for a Universal Allowance (July 2015). CEPR Discussion Paper No. DP10710, Available at SSRN: https://ssrn.com/abstract=2630158

Helmuth Cremer (Contact Author)

University of Toulouse (GREMAQ & IDEI) ( email )

Toulouse, 31000
France
+33 1 6112 8606 (Phone)
+33 1 6112 8637 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Kerstin Roeder

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

University of Augsburg ( email )

Universitätsstr. 2
Augsburg, 86159
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
174
PlumX Metrics