Basic income versus fairness: redistribution with inactive agents

Antoine Germain ()
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Antoine Germain: Université catholique de Louvain, LIDAM/CORE, Belgium

No 2023022, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper studies redistributive transfers between inactive, unemployed and employed agents. In a model with fully heterogeneous preferences and arbitrarily unequal skills, labor market inactivity arises from home production and disutility of participation. The social objective champions the ethics of equality of opportunity while upholding the Pareto principle. In the Mirrleesian second-best, it turns out that welfare analysis is reduced to a sufficient statistic. Its empirical application suggests that an inactivity benefit would not be welfare-improving in most high-income countries. Overall, the equity gains of introducing a basic income with respect to equality of opportunity are tenuous, whatever its efficiency costs.

JEL-codes: D63 D82 H21 H23 H24 I38 (search for similar items in EconPapers)
Pages: 43
Date: 2023-07-15
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2023022

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