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<p>This paper examines the impact of Guaranteed Minimum Income (GMI) schemes on work incentives at the household level. We show that these schemes create strategic complementarities between partners’ employment decisions. When one partner is non-employed or earns a low wage, the household is more likely to receive the benefit, which discourages the other partner from working to avoid losing the benefit. The disincentive to work does not instead apply to partners of high earners whose income exceeds the programme threshold. This leads the partners to coordinate their decisions so that both are non-employed. The negative impact of the GMI on labour supply is therefore more pronounced in economies with many single-earner households. Focusing on Italy, where the employment rate of married women is low and a relatively generous GMI programme was introduced in 2019, we use a structural labour supply model to estimate that the GMI would primarily reduce the employment rate of married men with non-working wives and increase the number of households in which neither partner works. Married women would be less affected due to the high employment rate of their husbands.</p>

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Minimum income and household labour supply

  • 期刊论文

  • 发表日期：

    2025年9月20日

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  • Francesca Carta,
  • Fabrizio Colonna

摘要

This paper examines the impact of Guaranteed Minimum Income (GMI) schemes on work incentives at the household level. We show that these schemes create strategic complementarities between partners’ employment decisions. When one partner is non-employed or earns a low wage, the household is more likely to receive the benefit, which discourages the other partner from working to avoid losing the benefit. The disincentive to work does not instead apply to partners of high earners whose income exceeds the programme threshold. This leads the partners to coordinate their decisions so that both are non-employed. The negative impact of the GMI on labour supply is therefore more pronounced in economies with many single-earner households. Focusing on Italy, where the employment rate of married women is low and a relatively generous GMI programme was introduced in 2019, we use a structural labour supply model to estimate that the GMI would primarily reduce the employment rate of married men with non-working wives and increase the number of households in which neither partner works. Married women would be less affected due to the high employment rate of their husbands.