Relative income, redistribution and well-being

Arbeitspapier

In a model with heterogeneous workers and both intensive and extensive margins of employment, we consider two systems of redistribution: a universal basic income, and a categorical unemployment benefit. Well-being depends on own-consumption relative to average employed workers' consumption, and concern for relativity is a parameter that affects model outcomes. While labour supply incurs positive marginal disutility, we allow negative welfare effects of unemployment. We also compare Rawlsian and utilitarian welfare in general equilibrium under the polar opposite transfer systems, with varying concern for relativity. Basic income Pareto dominates categorical benefits with moderate concern for relativity in both cases.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 5241

Classification and Topics

• Classification: Wirtschaft ; Taxation, Subsidies, and Revenue: General ; Market Structure, Pricing, and Design: General
• Subject: relative income ; redistribution ; basic income ; unemployment benefits ; happiness ; well-being

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): FitzRoy, Felix ; Nolan, Michael
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/46155
• Last update: 10.03.2025, 11:43 AM CET