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

Helmuth Cremer and Kerstin Roeder (kerstin.roeder@wiwi.uni-augsburg.de)

No 9191, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: political support; means testing; basic income (search for similar items in EconPapers)
JEL-codes: D3 D7 H2 H5 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2015-07
New Economics Papers: this item is included in nep-cdm, nep-pbe and nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Published - published in: Economics Letters, 2015, 136, 81-84

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Journal Article: Means testing versus basic income: The (lack of) political support for a universal allowance (2015) Downloads
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Working Paper: Means testing versus basic income: the (lack of) political support for a universal allowance (2015) Downloads
Working Paper: Means testing versus basic income: the (lack of) political support for a universal allowance (2015) Downloads
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