The Redistributive Impact of Alternative Income Maintainance Schemes: A Microsimulation Study Using Swiss Data

Ramses H. Abul Naga, Christophe Kolodziejczyk, Tobias Mueller

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Taking a benchmark scenario, the current situation in Switzerland, and using a microsimulation technique, we compare the effectiveness of various income maintenance schemes for reducing inequality and poverty. A full negative income tax allowance designed to eliminate poverty is shown to reduce income inequality most drastically. An integrated federal linear tax rate of 62 percent is required to make it viable. Aggregate work hours are reduced by approximately 10 percent and average disposable income falls by 9.3 percent under such circumstances. A participation income restricted to adults in employment and covering 50 percent of subsistence costs is however shown to result in an unambiguous social welfare improvement over the current situation in Switzerland.
Original languageEnglish
Pages (from-to)193-219
Number of pages28
JournalReview of Income and Wealth
Volume54
Issue number2
Early online date8 May 2008
DOIs
Publication statusPublished - Jun 2008

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