Adam Smith Business School

Dr Remzi Kaygusuz, Durham University.

"Rethinking the Welfare State"
Thursday, 27 April. 3 pm
Room 540 Main Building

Abstract

The U.S. spends non trivially on non-medical transfers for its working-age population in a wide range of programs that support low and middle-income households. How valuable are these programs for U.S. households? Are there simpler, welfare-improving ways to transfer resources that are supported by a majority? What are the macroeconomic e§ects of such alternatives? We answer these questions in an equilibrium, life-cycle model with single and married households who face idiosyncratic productivity risk, in the presence of costly children and potential skill losses of females associated with non-participation. Our Öndings show that a potential revenue-neutral elimination of the welfare state generates large welfare losses in the aggregate, although most households support the move as losses are concentrated among a small group. We Önd that a Universal Basic Income program does not improve upon the current system. If instead per-person transfers are implemented alongside a proportional tax, a Negative Income Tax experiment, it becomes feasible to improve upon the current system. Providing per-person transfers to all households is costly, and reducing tax distortions helps providing for resources to expand redistribution.

Bio

Remzi Kaygusuz's field of expertise is Macroeconomics. After receiving his PhD from Penn State University, he held positions at Sabanci and Tilburg universities. Currently, he is an Associate Professor of Economics at Durham University.

---

For further information, please contact business-school-research@glasgow.ac.uk

We foster a positive and productive environment for seminars through our Code of conduct.

First published: 21 March 2023