Guaranteed Minimum Income Schemes in Europe: Landscape and Design

This paper provides an overview of the design of means-tested Guaranteed Minimum Income schemes, which constitute an important component of social protection systems in European countries. It discusses how key design features differ across countries, including how countries balance the primary objec...

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Bibliographic Details
Main Author: Coady, David
Other Authors: Jahan, Samir, Shang, Baoping, Matsumoto, Riki
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2021
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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300 |a 40 pages 
651 4 |a Malta 
653 |a Income 
653 |a Optimal Taxation 
653 |a Labour; income economics 
653 |a Employment; Economic theory 
653 |a Public finance & taxation 
653 |a Taxes 
653 |a Labor markets 
653 |a Aggregate Labor Productivity 
653 |a National accounts 
653 |a Labor 
653 |a Economics of specific sectors 
653 |a National Government Expenditures and Welfare Programs 
653 |a Currency crises 
653 |a Tax allowances 
653 |a Personal Finance -Taxation 
653 |a Macroeconomics 
653 |a Personal Income and Other Nonbusiness Taxes and Subsidies 
653 |a Income tax 
653 |a Employment 
653 |a Economic & financial crises & disasters 
653 |a Provision and Effects of Welfare Program 
653 |a Wages, Compensation, and Labor Costs: General 
653 |a Economics: General 
653 |a Unemployment 
653 |a Informal sector; Economics 
653 |a Aggregate Factor Income Distribution 
653 |a Demand and Supply of Labor: General 
653 |a Aggregate Human Capital 
653 |a Efficiency 
653 |a Labor market 
653 |a Wages 
653 |a Intergenerational Income Distribution 
653 |a Government Policy 
700 1 |a Jahan, Samir 
700 1 |a Shang, Baoping 
700 1 |a Matsumoto, Riki 
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520 |a This paper provides an overview of the design of means-tested Guaranteed Minimum Income schemes, which constitute an important component of social protection systems in European countries. It discusses how key design features differ across countries, including how countries balance the primary objective of poverty alleviation against the desire to both manage the work disincentives inherent in such programs and contain fiscal cost. The analysis finds a clear trade-off between both concerns in practice, with many countries combining low generosity with low benefit withdrawal rates (BWRs) thus prioritizing employment incentives over the primary objective of poverty alleviation. Many countries can reduce this trade off by combining higher generosity with higher BWRs. Countries with very high BWRs should consider reducing these, including through allowing income disregards and time dependent (rather than income-dependent) benefit withdrawal. The work disincentives associated with higher BWRs can also be attenuated through strengthening complementary activation policies that incentivize and support participation in the labor market