Arbeitspapier
Relative income, redistribution and well-being
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.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 5241
- Classification
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Wirtschaft
Taxation, Subsidies, and Revenue: General
Market Structure, Pricing, and Design: General
- Subject
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relative income
redistribution
basic income
unemployment benefits
happiness
well-being
- Event
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Geistige Schöpfung
- (who)
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FitzRoy, Felix
Nolan, Michael
- Event
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Veröffentlichung
- (who)
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Institute for the Study of Labor (IZA)
- (where)
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Bonn
- (when)
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2010
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- FitzRoy, Felix
- Nolan, Michael
- Institute for the Study of Labor (IZA)
Time of origin
- 2010