The impact of a "Minimum Guaranteed Income Program" in Portugal

Miguel Gouveia and Carlos Rodrigues

No 1999/03, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: The objective of this paper is to estimate the impact of the Portuguese Minimum Guaranteed Income Program (RMIG). We estimate its impact on the distribution of household incomes and poverty as well as the size of government expenditures necessary to finance the program. The baseline adopted is constructed under the assumption of no behavioural responses to the transfer mechanism and of total participation of all eligible households. The simulation shows that 4,8% of domestic households and 5,7% of the population are eligible to receive the RMIG. The Program has a small but positive impact in reducing inequality. However, taking labour supply effects into account results in a smaller gain in inequality reduction. Similarly, we have a small but positive impact on the poverty rate for individuals. This gain, however, is almost cancelled when labour supply reactions are taken into account. However the most important consequences of the RMIG are sharp gains in the measures of poverty sevefity and intensity. In these dimensions, taking into account the labour supply incentives of the RMIG does not reduce substantially the positive impacts of the Program.

Keywords: Income Distribution; Inequality; Poverty Alleviation; Social Policy (search for similar items in EconPapers)
JEL-codes: D63 I38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (12)

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