Employment and financing effects of the guaranteed minimum income proposed by Dieter Althaus

Clemens Fuest, Andreas Peichl and Thilo Schäfer, Institute for Public Finance at the University of Cologne, analyse the employment and financing effects of the guaranteed minimum income concept of Dieter Althaus, Minister President of Thuringia. In their opinion the proposed model will not relieve the labour market, since as a result of the guaranteed minimum income, which all (adult) citizens receive independently of any other income, the option of not working or working less becomes more attractive than under the current system of taxation. In addition, financing the concept would be very expensive, amounting to more than €180 billion. Combi-wage models, in the opinion of the authors, present a reasonable alternative to a guaranteed minimum income for all.