Abstract
ELIE can be interpreted as a minimum income scheme, financed by lump-sum taxes. While Kolm is careful in stating that his theory of macrojustice does not apply to individuals voluntarily working less than the “initial equal labour” k, we consider an extended scheme in which equal-labour income equalisation is also applied to these individuals. This extended ELIE may induce social waste as individuals with a low taste for working may opt for voluntary unemployment. We simulate the magnitude of this social waste with microdata for Belgium and compare extended ELIE with a first-best scheme and a second-best scheme (based on a linear income tax), implementing the same minimum income. The social waste induced by extended ELIE is intermediate between the social waste induced by the first- and second-best schemes, and remains relatively small for realistic levels of redistribution. Assumptions about the preferences of the voluntarily unemployed play a crucial role.
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© 2011 Springer Berlin Heidelberg
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Ooghe, E., Schokkaert, E. (2011). Is ELIE a Wasteful Minimum Income Scheme?. In: Gamel, C., Lubrano, M. (eds) On Kolm's Theory of Macrojustice. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-78377-0_8
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DOI: https://doi.org/10.1007/978-3-540-78377-0_8
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