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Labor Supply Responses of Italian Women to Minimum Income Policies

Anna Laura Mancini ()

No 94, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: Minimum income policies are policies aimed at guarantee all citizens with a minimum level of income and at fighting social exclusion typically associated with extreme poverty. Theoretically, their main shortcoming is the disincentive effect on labour market participation they could generate in the bottom part of income distribution, due to the high effective marginal tax rate they impose around the threshold level. This paper employs a structural labor supply model under discrete choices to test the existence and the magnitude of this disincentive effect on Italian female labor supply. Our empirical results show that family structure is crucial in determining the existence of a disincentive effect: only married women experience it, while single women participation rates increase under all possible minimum income schemes. The magnitude of both the positive and the negative effect depend on the policy design

Keywords: Labor supply; welfare transfers; tax-benefit system; microsimulation. (search for similar items in EconPapers)
JEL-codes: J22 C25 H31 C25 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008
New Economics Papers: this item is included in nep-dcm, nep-eec and nep-lab
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