The current Italian income support policies are defective with respect to effi- ciency and equity. A reform must face five crucial choices: universal vs. categorical policies; transfers vs. subsidies; unconditional vs. means-tested policies; coverage; flat vs. progressive tax rules. Using a microeconometric model and a social wel- fare methodology, we simulate—under fiscal neutrality and market equilibrium—the effects of 30 policies obtained from three basic types: conditional basic income, unconditional basic income and wage subsidies. The alternative reforms are evalu- ated according to four different social welfare criterion: the pure utilitarian and three different versions of a Gini-type social welfare function. The pure utilitarian crite- rion favours reforms based on a wage subsidy or a combination of wage subsidies and transfers. The Gini-type criteria favour unconditional transfers or combinations of wage subsidies with unconditional transfers. Most of the reforms turn out to be preferable to the current system: the choice set available for selecting a “best” reform given different criteria is very large.

Five Crossroads on the Way to Basic Income. An Italian Tour

COLOMBINO, Ugo
2015

Abstract

The current Italian income support policies are defective with respect to effi- ciency and equity. A reform must face five crucial choices: universal vs. categorical policies; transfers vs. subsidies; unconditional vs. means-tested policies; coverage; flat vs. progressive tax rules. Using a microeconometric model and a social wel- fare methodology, we simulate—under fiscal neutrality and market equilibrium—the effects of 30 policies obtained from three basic types: conditional basic income, unconditional basic income and wage subsidies. The alternative reforms are evalu- ated according to four different social welfare criterion: the pure utilitarian and three different versions of a Gini-type social welfare function. The pure utilitarian crite- rion favours reforms based on a wage subsidy or a combination of wage subsidies and transfers. The Gini-type criteria favour unconditional transfers or combinations of wage subsidies with unconditional transfers. Most of the reforms turn out to be preferable to the current system: the choice set available for selecting a “best” reform given different criteria is very large.
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Income support mechanisms, Basic income, Guaranteed minimum income, Wage subsidies, Tax reform simulation
Colombino, Ugo
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2318/1525547
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