Mich "Basic income versus fairness : optimal taxation with inactive agents"

Mardi intime de la Chaire Hoover par Antoine Germain

We study redistributive taxation when there are inactive, unemployed and
employed agents. In a model with both heterogeneous preferences and unequal skills, labour market inactivity arises because of home production or
disutility of participation in the formal sector.

The social objective is characterized by fairness axioms championing the ethics of equality of opportunity while respecting the Pareto principle.
Applying this objective in a Mirrleesian environment, we show that the optimal inactivity benefit (1) decreases with the economy’s average wage rate,
(2) supplements rather crowds out the traditional safety net,
and (3) is likely to be negative empirically for most developed countries.
Overall, the results underline an unexpected conflict, but not an impossibility, between basic income and equality of opportunity.