Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114073
Authors: 
Cremer, Helmuth
Roeder, Kerstin
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9191
Abstract: 
This paper studies the political economy of a basic income (BI) versus a means tested welfare scheme. We show in a very simple setting that if society votes on the type of system, its generosity as well as the "severity" of means testing (if any), a BI system could only emerge in the political equilibrium under very strong and empirically implausible conditions. Instead, the political process leads to a means tested system. The necessity to draw political support does affect the design of the system, but it only implies that means testing becomes less severe so that benefits are extended also to the middle classes. However, a fully universal system is rejected by a majority.
Subjects: 
basic income
means testing
political support
JEL: 
D3
D7
H2
H5
Document Type: 
Working Paper

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