Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/96799 
Authors: 
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers No. 8087
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
The current Italian income support policies are defective with respect to both efficiency and equity. A more effective design 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 welfare methodology, we simulate the effects of 30 versions of three basic types: guaranteed minimum income, unconditional basic income and wage. The simulation preserves fiscal neutrality and adopts a methodology that allows for market equilibrium and ensures a consistent comparative statics interpretation of the results. The social welfare optimal policy is an unconditional transfer coupled with a wage subsidy, with a total benefit amounting to about 70% of the poverty level, or – depending on the social welfare criterion – a pure unconditional transfer amounting to 100% of the poverty level.
Subjects: 
income support mechanisms
basic income
guaranteed minimum income
wage subsidies
tax reform simulation
JEL: 
H31
H21
C25
Document Type: 
Working Paper

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