Viktor Steiner - Microsimulation of a new Basic Income Scheme for Austria

• Presenting author: Viktor Steiner (Freie Universität Berlin and GAW)

• Authors: Viktor Steiner, Florian Wakolbinger

• Session: B02C - Basic Income - Tuesday 11:00-12:30 - Senate Hall

• Slides: PDF

The current Austrian needs-based basic income system implies extremely high benefit-withdrawal rates and, in conjunction with special regulations for „marginal employment“, discourages full-time work of low-wage earners. It also implies unequal treatment of children living in households of basic-income recipients and of low income families not receiving non-work benefits. Using the behavioral microsimulation model ATTM (Austrian Tax Transfer Microsimulation Model) we analyze the employment and distributional effects of a reform of the current Austrian means-tested unemployment benefit and social welfare system. The analyzed reform proposal integrates the existing social minimum („Sozialhilfe“) and the means-tested unemployment benefit (“Notstandshilfe”), increases financial incentives for full-time employment of low-wage workers relative to marginal employment by a wage subsidy rewarding working longer hours, and introduces a universal taxable uniform child benefit. The proposed reform is made budgetary neutral after accounting for expected employment effects by abolishing the existing family benefit („Familienbonus“) and cutting existing regulations that subsidize short working hours. The proposed reform would have modest positive effects on total working hours and overall employment in terms of full-time equivalents, where the largest effect is estimated for women living in couple households. Income for households at the bottom of the income distribution would increase substantially, especially for couples with children, but income losses for the long-term unemployed who do not take up full-time work after the reform could be substantial. Overall, income inequality would modestly be reduced.