Employment and income effects of a basic income reform in Austria

We analyze a basic income reform that aims at reducing negative labor supply incentive effects and estimate expected employment and income effects of the reform on the basis of our microsimulation model ATTM. Simulation results show a substantial increase in employment by about 44.000 full-time equivalents, and moderate overall income gains. Households that care for children realize the largest income gains. The long-term unemployed entitled to unemployment assistance (Notstandshilfe) bear, on average, the largest income losses due to the abolishment of the non-withdrawal of earnings from marginal employment and, in case of couples, partner’s income.