Fighting poverty: Assessing the effect of guaranteed minimum income proposals in Québec

Arbeitspapier

This paper analyzes the impact of a recent recommendation made by Quebec's Comité consultatif de lutte contre la pauvreté et l'exclusion sociale to guarantee every individual an income equal to 80% of Statistics Canada's Market Basket Measure (MBM). Workers with earnings at least equivalent to 16 weekly hours at the minimum wage would be entitled to 100% of the MBM. We also investigate the impact of three alternative proposals: 1) a change in the above the hours cut-off from 16 to 30 hours; 2) a guaranteed income equal to 100% of the MBM, irrespective of earnings; 3) a 3$/hour conditional wage subsidy. To do this, we first estimate a structural labor supply model using the existing tax code and predict the labor supply of a representative sample of individuals based upon the parameter estimates of the model. Simulations show that the original recommendation would have strong negative impacts on participation rates of low-earners and that its cost would exceed $ 2 billion. Increasing the hours cut-off is predicted to have little impact beyond those of the original recommendation. Providing a guaranteed income equivalent to 100% of the MBM, on the other hand, would have a large impact. We find that contrary to what is usually assumed, guaranteed income schemes may increase the incidence of low-income rather than decrease it.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 7283

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities ; Personal Income, Wealth, and Their Distributions ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Fiscal Policies and Behavior of Economic Agents: Household ; Welfare, Well-Being, and Poverty: General ; Time Allocation and Labor Supply
• Subject: Guaranteed Minimum Income ; ex ante evaluation ; labor market effects ; financial cost ; poverty alleviation ; public finance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Clavet, Nicholas-James ; Duclos, Jean-Yves ; Lacroix, Guy
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/71689
• Last update: 10.03.2025, 11:42 AM CET