Impuesto negativo al ingreso del trabajo: una política contra la desigualdad

Andres Hernando and Estéfano Rubio

Estudios Públicos, 2017, issue 146, 49-85

Abstract: This article presents the earned income tax credit (EITC), an instrument that consists in topping up lower-paid workers’ earnings with cash transfers. As a social policy, it has the advantage of being an effective mechanism for tackling inequality that does not greatly interfere with the trade-off between leisure and work but encourages labour market participation and formalization, cuts poverty and reduces the stigma attached to being a social programme beneficiary. This instrument is offered for two purposes: (i) as an actual policy option and (ii) as a benchmark for contrasting the potential cost-effectiveness of any other public policy intended to reduce inequality. The paper applies a genetic algorithm for numerical optimization to evaluate the parameters that optimally minimize income inequality and shows that, for example, spending 5.000 million dollars a year would reduce the Gini by between 4.7 and 6.1 points, which is more than the entire reduction recorded between 1990 and 2015.

Keywords: inequality; employment; entitlements; social policies; inequality benchmark (search for similar items in EconPapers)
JEL-codes: D31 H24 I38 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:cpt:journl:v::y:2017:i:146:p:49-85

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