Means testing versus basic income: the (lack of) political support for a universal allowance

Cremer, Helmuth and Roeder, Kerstin (2015) Means testing versus basic income: the (lack of) political support for a universal allowance. Economics Letters, 136. pp. 81-84.

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Official URL: http://tse-fr.eu/pub/30380

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 themiddle classes. However, a fully universal system is rejected by a majority.

Item Type: Article
Language: English
Date: November 2015
Refereed: Yes
Uncontrolled Keywords: Basic income, Means testing, Political support
JEL codes: D3 - Distribution
D7 - Analysis of Collective Decision-Making
H2 - Taxation, Subsidies, and Revenue
H5 - National Government Expenditures and Related Policies
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 19 Apr 2016 12:29
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:30380
URI: http://publications.ut-capitole.fr/id/eprint/20316

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