Cash Transfers and Guaranteed Minimum Income Programs:
Research, Evaluation, and Policy
Prague, Czech Republic
September 9-10, 2024
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“Towards Universal Social Protection: Simulating Reform Strategies in Five EU Countries”
Emma Álvarez Cronin and Jose Antonio Noguera, Autonomous University of Barcelona
Towards Universal Social Protection: Simulating Reform Strategies in Five EU Welfare States.
Labour market automation and digitalisation are changing labour relations and creating new forms of work that do not properly adjust to traditional social protection schemes. Income support policies in conventional welfare states fail to include non-standard workers, either because they are not entitled to contributory benefits or because non-contributory social transfers are incompatible with labour income. This typically creates gaps in social protection and income instability for many households. At present, there are broad discussions on which alternative income support policies would be better suited to tackle in-work poverty and inequality in this new scenario. The debate mainly revolves around two alternatives, which are 1) in-work benefits, such as Wage Supplements (WS) or Guaranteed Income (GI) programmes compatible with labour income, and 2) a flat-rate Universal Basic Income (UBI).
In this contribution, we aim to create evidence that can help answer this question for the cases of Ireland, France, Finland, Spain, and Estonia, by simulating alternative options for in-work benefits and basic income policies and examining their impact on coverage, poverty and in-work poverty reduction, inequality, redistribution, and cost, as well as possible forms of financing (mainly through Personal Income Tax reform). We use the microsimulation model Euromod and EU-SILC microdata for 2022. The selection of countries seeks to represent five different welfare models: Liberal, Conservative, Social-democratic, Mediterranean, and Eastern European. The aim is to observe the differential effect of these potential reforms in diverse institutional and labour market contexts and to understand which strategies may be more beneficial for each welfare model. In sum, we seek to answer the following questions:
How effective are current means-tested benefits, specifically MI schemes, when it comes to tackling poverty, in-work poverty, and inequality? What would be the redistributive impact and the effect on poverty reduction, inequality, and public spending of policy proposals such as a Guaranteed Income, a generalised Wage Supplement, or a Universal Basic Income at different levels of generosity? How might these reforms be financed? What specific effects can we observe in European countries with different welfare models?