Some Macroeconomic Consequences of Basic Income and Employment Subsidies

Thomas Moutos and William Scarth

No 916, CESifo Working Paper Series from CESifo

Abstract: Two macro models – one for a closed economy and the other for a small open economy – are used to examine the scope for income redistribution and employment creation. In particular, the introduction of both a guaranteed annual income (basic income) and an employment subsidy are examined, and these policies are compared to a straightforward tax cut for (unskilled) labour. All initiatives are financed by a tax on capital. In the open-economy setting, capital is perfectly mobile, so there is a trade-off between the direct benefits of each policy, and the costs that follow from the out-migration of capital. The model is used to assess the relative importance of these competing effects.

Keywords: guaranteed annual income; subsidies; capital taxes; redistribution. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (5)

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