Basic income or a single tapering rule? Incentives, inclusiveness and affordability compared for the case of Finland
The combination of different working-age benefits, childcare costs and income taxation creates complexity, reduces work incentives and holds back employment. This paper compares Finland's benefit system with two benefit reform scenarios: a uniform benefit for all ("basic income") and...
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| Other Authors: | , |
| Format: | eBook |
| Language: | English |
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Paris
OECD Publishing
2018
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| Series: | OECD Economics Department Working Papers
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| Collection: | OECD Books and Papers - Collection details see MPG.ReNa |
| Summary: | The combination of different working-age benefits, childcare costs and income taxation creates complexity, reduces work incentives and holds back employment. This paper compares Finland's benefit system with two benefit reform scenarios: a uniform benefit for all ("basic income") and a universal tapering rule ("universal credit"). The scenarios are modelled in the OECD TaxBen model and the TUJA microsimulation model. We find that replacing current benefits with a basic income would improve incentives for many, but with a drastic redistribution of income and likely increasing poverty as a result. Merging working-age benefits with similar aims and coordinating their tapering against earnings would on the other hand consistently improve work incentives and transparency, while preserving or improving social protection |
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| Physical Description: | 30 p |