Five Crossroads on the Way to Basic Income: An Italian Tour

Ugo Colombino

No 8087, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The current Italian income support policies are defective with respect to both efficiency and equity. A more effective design must face five crucial choices: universal vs. categorical policies; transfers vs. subsidies; unconditional vs. means-tested policies; coverage; flat vs. progressive tax rules. Using a microeconometric model and a social welfare methodology, we simulate the effects of 30 versions of three basic types: guaranteed minimum income, unconditional basic income and wage. The simulation preserves fiscal neutrality and adopts a methodology that allows for market equilibrium and ensures a consistent comparative statics interpretation of the results. The social welfare optimal policy is an unconditional transfer coupled with a wage subsidy, with a total benefit amounting to about 70% of the poverty level, or – depending on the social welfare criterion – a pure unconditional transfer amounting to 100% of the poverty level.

Keywords: guaranteed minimum income; basic income; income support mechanisms; wage subsidies; tax reform simulation (search for similar items in EconPapers)
JEL-codes: C25 H21 H31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2014-03
New Economics Papers: this item is included in nep-cmp
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Citations: View citations in EconPapers (13)

Published - revised version published in: Italian Economic Journal, 2015, 1 (3), 353-389

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Journal Article: Five Crossroads on the Way to Basic Income. An Italian Tour (2015)
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