By Loek Groot, Robert-Jan van der Veen
Persisting unemployment, poverty and social exclusion, labour industry flexibility, task lack of confidence and better salary inequality, altering patters of labor and kinfolk existence are one of the elements that exert strain on welfare states in Europe. This e-book explores the possibility of an unconditional uncomplicated source of revenue, with no ability attempt or paintings requirement, to fulfill the demanding situations posed via the hot social query, in comparison to rules of backed insertion in paintings. It additionally assesses the political probabilities of simple source of revenue in quite a few eu nations. those issues are hugely proper to policy-makers within the box of labour markets and social safeguard, economists, political philosophers, and a social technology viewers generally.
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Extra info for Basic Income on the Agenda: Policy Objectives and Political Chances
However, this would not contribute much to alleviate poverty, since most of these newcomers probably belong to non-poor families. A wage cost subsidy might also have an unintended negative effect if employers lower the wage of existing jobs that are just above the income ceiling of the subsidy in order to become eligible for the wage subsidy. Although the workers in these jobs would not drop below the poverty line, the position of this low income group would nevertheless deteriorate. 45 Basic Income on the Agenda So, although a general wage cost subsidy will probably increase employment in the short run, the expected decline in unemployment is small and the impact on the poverty rate negligible.
This might be a disincentive to invest in skills, something which, in the long run, also hinders productivity growth and hence economic growth. If the labour market is in equilibrium, the part of the wage subsidy that ultimately results in a rise in the net wage (instead of a reduction of wage costs) is determined by the elasticity of labour supply relative to the elasticity of labour demand. As explained above, in the short term labour supply might be quite elastic because of the influx of school leavers and housewives, so not much of the wage subsidy would be shifted to the employees.
The impact of both kinds of wage subsidies will be discussed separately. The immediate impact on unemployment and poverty is, of course, nil, since this kind of wage subsidy is only effective if it induces employers to create extra jobs. The positive impact of lower payroll taxes on the demand for low skilled workers in the short run will be at least partly offset by the displacement of high skilled workers. The net effect on total employment depends on the wage cost elasticity of the demand for low-skilled labour compared to the demand elasticity for high-skilled labour.
Basic Income on the Agenda: Policy Objectives and Political Chances by Loek Groot, Robert-Jan van der Veen