Rethinking Work and Income Maintenance Policy: Promoting Gender Equality Through a Citizens' Basic Income

A citizens' basic income scheme is based on the principles of individuality, universality, and unconditionality; when combined with the notion of meeting "basic needs" it would serve to provide a minimum income guarantee for all adult members of society. However, implementation would entail radical reform of existing patterns of welfare delivery and would bring into question the institutionalized relationship between work and welfare, a basic premise of modern welfare states. To date, the debate over a citizens' basic income has emphasized its effects on labor markets, thereby displaying an androcentric bias. Although the role of women in society is central to social policy reform, the existing basic income literature is disturbingly void of any comprehensive treatment of women. No genuine discussion has taken place about the nature of women's lives and work and how these should be valued. Social policy reform should take account of all gender inequalities and not just those relating to the traditional labor market. This paper argues that the citizens' basic income model can be a tool for promoting gender-neutral social citizenship rights, but that any future marriage of justice and efficiency must first divorce work from income.     

现行税制对劳动力供给影响的理论与实证分析

税收对劳动力供给的影响取决于征税后收入效应与替代效应的对比.然而,不同收入水平的国家以及不同税制结构下所产生的收入效应与替代效应存在一定差异.本文从理论与实证相结合的角度,运用OLS方法,分析了在以商品劳务税为主体的税制结构下,中国现行税制对劳动力供给的影响,认为对劳动所得征税会产生收入效应大于替代效应的结果,最后提出了缓解劳动供求结构性矛盾的税制改革取向.     

Is income security possible in a capitalist economy? : An agency-theoretic analysis of an unconditional income grant

This paper is an assessment of the economic effects of the replacement of means-tested or employment-status-related state redistributive programs by a basic income grant paid unconditionally to all adults without regard to their employment status or pretransfer incomes. A microeconomic model is developed to identify the effects of such a grant on the institutional mechanisms governing the supply of work by those employed and the implied effects on the level of wages, profitability an investment. Two questions are posed. First, taking account of the implied effects on wages, labor discipline and taxes, is it possible to introduce a basic income grant without reducing the level of economy with maintainance of the level of profitability and so, what is the largest grant consistent with maintainance of the level of profitability and investment? The answer to the first question is affirmative. The answer to the second is that for an economy such as the United States, the profitability and investment maintaining grant is small but hardly insignificant; its implementation would effect a major redistribution of income from the employed and the unemployed to the non-employed.     

Shifting Taxes from Labor to Consumption: More Employment and more Inequality?

This paper investigates the effect of shifting taxes from labor income to consumption on labor supply and the distribution of income in Germany. We simulate stepwise increases in the value‐added tax (VAT) rate, which are compensated by revenue‐neutral reductions in income‐related taxes. We differentiate between the personal income tax (PIT) and social security contributions (SSC). Based on a dual data base and a microsimulation model of household labor supply behavior, we find a regressive impact of such a tax shift in the short run. When accounting for labor supply adjustments, the adverse distributional impact persists for PIT reductions, while the overall effects on inequality and progressivity become lower when payroll taxes are reduced. This is partly due to increases in aggregate labor supply, resulting from higher work incentives.     

Does labour supply respond to a flat tax?

We exploit the exogenous change in marginal tax rates created by the Russian flat tax reform of 2001 to identify the effect of taxes on the labour supply of men and women. We apply a weighted difference‐in‐difference regression approach and instrumental variables to estimate labour supply functions using a panel dataset. The mean regression results indicate that the tax reform led to a statistically significant increase in hours of work for men but had no effect on work hours for women. However, we find a positive response to tax changes in both tails of the female work hour distribution. We also find that the reform increased the probability of finding a job among both men and women. Despite significant variation in individual responses, the aggregate labour supply elasticities are trivial. This suggests that reform‐induced changes in labour supply are an unlikely explanation for the amplified personal income tax revenues that followed the reform.     

On the optimal design of pension systems

The present paper aims to quantify efficiency properties of flat and earnings-related pay-as-you-go financed social security systems of various institutional designs in order to identify an optimal pension design. Starting from a benchmark economy without social security, we introduce alternative pension systems and compare the costs arising from liquidity constraints as well as distortions of labor supply versus the benefits from insurance provision against income and lifespan uncertainty. Our findings suggest an optimal replacement rate of about 50 % of average earnings. In our model a single-tier earnings-related pension system yields the highest efficiency gains dominating flat benefits as well as two-tier systems of any form. We also show that the negative correlation between pension progressivity and pension generosity of real-world social security systems can be justified on efficiency grounds. Finally, our results indicate a positive impact of means-testing flat benefits against earnings-related benefits within multi-pillar pension systems.     

Labor or consumption taxes? An application with a dynamic general equilibrium model with heterogeneous agents

This study analyzes the effects of tax reform that shifts tax burden from labor to consumption. In this context, I also deal with the issue of progressivity. Even though this kind of tax policy change has recently gained popularity, its positive effects are debatable while the offsetting effect of a consumption tax on labor supply makes the net output change rather ambiguous. I examine these effects using a dynamic general equilibrium model with heterogeneous agents. The model is calibrated to fit certain characteristics of the Finnish economy. In addition to output and employment effects, I study the tax reform's effect on income and wealth distribution. First, I find that eliminating progressivity in labor taxation increases output via increase in capital accumulation that comes, however, in expense of slightly more inequality. Then, tax reform that replaces progressive labor taxes with a flat-rate consumption tax leads to a significant rise in capital accumulation, a negligible change in labor supply and gross labor income distribution, but a relatively considerable increase in wealth concentration.     

关于公有经济收入差别倒U理论的讨论与验证(上)

在经济发展方式逐步从增长型向分配型、从生产型向消费型、从建设型向民生型转变的过程中,回顾和总结学术界关于居民收入分配差别的讨论显然是必要的。文章从多个方面回顾、分析和考察了"公有经济收入差别倒U理论"这一理论模型提出后的争论焦点及演变过程,包括围绕这一理论所讨论的主要内容,比如有关公有制经济与私有制经济条件的比较分析,有关劳动差别、劳动供求、剩余/生计比以及农村收入差别大于城镇差别等两部门内部各种因素的趋势、二元结构部门转换影响收入差别的讨论,有关国有资本积累及改革引起的民营资本积累、税收政策和体制改革对收入差别变动趋势的影响的讨论,以及这一理论在中国的验证等。分析表明,目前中国居民收入差别还在沿着公有经济收入差别倒U曲线的前半段逐步呈"阶梯形"上升,但上升的势头已经趋缓,并且个别方面比如城市化等因素导致的收入差别已经初现下降趋势。     

Wage subsidies, work incentives, and the reform of the Austrian welfare system

We analyze the employment and income effects of a needs-based minimum benefit system (“Bedarfsorientierte Mindestsicherung”) which has recently been introduced in Austria. The aim of this reform was to reduce poverty as well as to increase work incentives for recipients of social assistance. On the basis of a behavioral microsimulation model we show that this new system slightly increases employment but reduces incomes for the poorest households remaining unemployed. As an alternative, we analyze a budgetary neutral reform proposal which reduces financial incentives for marginal employment and provides a wage subsidy rewarding working longer hours. This alternative reform would yield larger positive employment effects, but more households would suffer from income losses. Overall, income inequality and poverty are affected little, however, both under the new social welfare system and the alternative reform proposal.     

Estimating labour supply responses and welfare participation: Using a natural experiment to validate a structural labour supply model

We estimate an economic model of labour supply and welfare participation using data on single men from Quebec drawn from the 1986 Canadian Census. Detailed budget sets for each work‐welfare combination—accounting for income taxes, tax credits and welfare benefit rules—are derived using a micro‐simulation model. We show that predicted reactions to a welfare reform that took place in 1989 replicate actual changes in labour supply and welfare participation. We also illustrate the advantage of having estimated a structural model by showing how labour supply and welfare participation change when income taxes and benefit levels change.     

Household Taxation, Income Splitting and Labor Supply Incentives - A Microsimulation Study for Germany

We analyze potential labor supply effects of a shift from thecurrent German system of joint taxation of married couples toa system of limited real income splitting on the basis of aneconometric household labor supply model embedded in a tax benefitmodel. Our simulation results show relatively small labor supplyeffects of a shift from the current system to one of limitedreal income splitting system. In the benchmark scenario of ashift to separate taxation labor supply of wives would increasesubstantially in west Germany, while a significant number ofhusbands would drop out of the labor force. (JEL H31, H24, J22)     

Fertility,Female Labor Supply,and Family Policy

The present paper develops an overlapping generations general equilibrium model for Germany in order to study the impact of public policy on household labor supply and fertility decisions. Starting from a benchmark equilibrium which reflects the current German family policy regime we introduce various reforms of the tax and child benefit system and quantify the consequences for birth rates and female labor supply. Our simulations indicate three central results: First, higher transfers to families (either direct, in‐kind or via family splitting) may increase birth rates significantly, but they may come at the cost of lower female employment. Second, the introduction of individual taxation (instead of joint taxation of couples) would increase female employment but might further reduce current birth rates in Germany. Third, it is possible to increase birth rates and female employment rates simultaneously if the government invests in child care facilities for children of all ages.     

Hours risk and wage risk: repercussions over the life cycle*

We decompose earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks, we formulate a life-cycle model of consumption and labor supply. For estimation, we use data on married American men from the Panel Study of Income Dynamics. Permanent wage shocks explain 31 percent of total risk, permanent hours shocks 21 percent. Progressive taxation attenuates cross-sectional earnings risk, but its life-cycle insurance impact is much smaller. At the mean, a one-standard-deviation hours shock raises lifetime income by 11 percent, a wage shock by 13 percent.     

Impact of remittances on male and female labor force participation patterns in Africa: Quasi‐experimental evidence from Ghana

In this paper, we examine how remittances, an outcome of labor mobility, affect labor market activities in Ghana using detailed household and individual‐level data. This is important, considering the extensive literature that has documented the remittance–poverty reduction nexus. First, we find a strong negative association between household remittance‐receiving status and individual labor supply decisions using instrumental variable estimation techniques. Second, we find the depressing effect of remittances on labor supply decisions to be much stronger in rural areas. Rural women who reside in remittance‐receiving households are less likely to be in the labor force compared with those who do not reside in such households. Remittances have very little impact on labor supply decisions in urban areas. Our findings support that remittances can exacerbate long‐term poverty reduction in rural areas through lower labor force participation, and as such rural‐based and gender‐based interventions may be needed to help redirect remittance income.     

Are Progressive Income Taxes Stabilizing?

We assess the stabilizing effect of progressive income taxes in a monetary economy with constant returns to scale. It is shown that tax progressivity reduces, in parameter space, the likelihood of local indeterminacy, sunspots and cycles. However, considering plausibly low levels of tax progressivity does not ensure saddle‐point stability and preserves as robust the occurrence of sunspot equilibria and endogenous cycles. It turns out that increasing progressivity, through its impact on after‐tax income, makes labor supply more inelastic. However, even when large, tax progressivity does not neutralize the effects of expected inflation on current labor supply which may lead to expectation‐driven business fluctuations.     

The Marginal Costs and Benefits of Redistributing Income and the Willingness to Pay for Status

The effect of status on aggregate welfare is ambiguous for marginal reforms that redistribute income. If average consumption falls, the change in relative consumption increases household utility but reinforces the decrease in household labor supply, raising welfare cost. For parameterizations of the model developed here, reforms which lower average consumption increase aggregate welfare. Numerical calculations show that status increases marginal welfare cost and marginal net benefit for a demogrant reform. Redistributing to high income households may increase aggregate welfare depending on the definition of average consumption and if the willingness to pay for status increases with income.     

Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration*

In this paper we employ a wage‐setting approach to analyze the labor market effects of immigration into Germany from 1980 to 2004. This enables us to consider labor market rigidities, which are prevalent in Europe. We find that the elasticity of the wage‐setting curve is particularly high for young workers. Moreover, natives and foreigners are imperfect substitutes. The wage and employment effects of immigration depend on the skill structure of the immigrant workforce. Because the foreign labor supply shift has mainly affected the high‐skilled labor market segment, the 4 percent increase of the workforce through immigration has not increased either aggregate or foreign unemployment.     

Why has Income Inequality in Germany Increased From 2002 to 2011? A Behavioral Microsimulation Decomposition

This paper proposes a method to decompose changes in income inequality into the contributions of policy changes, wage rate changes, and population changes while considering labor supply reactions. Using data from the Socio‐Economic Panel (SOEP), this method is applied to decompose the increase in income inequality in Germany from 2002 to 2011, a period that saw tax reductions and a controversial overhaul of the transfer system. The simulations show that tax and transfer reforms have had an inequality‐reducing effect as measured by the mean log deviation and the Gini coefficient. For the Gini, these effects are offset by labor supply reactions. In contrast, policy changes explain part of the increase in the ratio between the 90th and the 50th income percentiles. Changes in wage rates have led to a decrease in income inequality. Thus, the increase in inequality was due to changes in the population.     

Social Security Systems,Human Capital,and Growth in a Small Open Economy

We consider a small open economy in which the level of public education funding is determined by popular vote. We show that growth can be enhanced by the introduction of pay‐as‐you‐go pensions even if the growth rate of aggregate wages falls short of the interest rate. The reason is that the pay‐as‐you‐go (PAYG) system allows future retirees to partially internalize positive externalities of public education due to the positive effect of higher future labor productivity on their pension benefits. The majority support for education funding will be especially strong when the PAYG benefit formula is flat, i.e., progressively redistributive. If a flat benefit PAYG pension system is in place then the economy will achieve the highest growth rate relative to the alternative pension system designs. While such PAYG pension system may be opposed by the majority of working individuals due to inferior returns to their pension contributions relative to a funded scheme, it is likely to be politically sustained by a coalition of older individuals and lower income workers.     

Labor supply in urban China

Using labor supply responses from 10,560 urban Chinese workers, two-stage least squares estimations identify positive compensated wage effects and negative income effects that are, for the most part, statistically significant. The gross wage effects are mostly positive but they indicate relatively low uncompensated labor supply elasticities. The compensated wage effects are much larger; these may be important in assessing the labor market consequences of reform policies that monetize non-pecuniary benefits. The significance of labor supply responses depends on individual responsibilities within the family; the effects are largest for women and non-household heads. Journal of Comparative Economics 31 (4) (2003) 795–817.