The introduction of a basic income: a fruitful chance or an insidious trap for the italian labour market? An econometric analysis of the italian case.

Abstract

This paper explores the potential effects of the introduction of a basic income on the italian labour market. This policy measure is fully defined by three steps: a growth of the public expenditure (a), a reduction of the unemployment benefits (b1) and a growth of the fiscal pressure (b2). After estimating a theoretical macro-model, the impulse response functions of the employment and the labour force to respect to (a), (b1) and (b2) shocks are calculated. Results show that the basic income does not seem to produce any crowding out effect on the labour market in the long run. On the contrary, the final effect is a growth both of employment and participation. In the medium run the size of this effect is depending on the combination of (b1) and (b2) adopted in order to counterbalance the starting expenditure growth occurred in step (a).