Simulating a minimum income for Greece

With poverty at record levels, economists from the Policy Analysis Research Unit at the Athens University of Economics and Business have used EUROMOD, the ISER-based microsimulation unit, to forecast the impact of introducing a minimum guaranteed income to Greece’s poorest households.

Simulating a guaranteed minimum income for Greece by Manos Matsaganis & Chrysa Leventi describes how Greece is one of the last EU countries to introduce a broad-based social assistance programme of last resort (acting as guaranteed minimum income).

The latest Spending Review 2013-2014 provides some funding (€20m) for a pilot programme to be implemented in two areas of the country in the year 2014.

“We use EUROMOD in order to estimate the fiscal and distributional impact of such a scheme. We hypothesise two versions of guaranteed minimum income (GMI): the base scenario assumes that the income guarantee for one person is set at the level of unemployment insurance benefit (€360 per month); in the alternative scenario, that amount is linked to the unemployment assistance benefit (€200 per month); housing allowances would also be payable.

We find that the introduction across the country of a GMI along the lines of our base scenario would eliminate extreme poverty, and drastically reduce relative poverty, at a cost of over 1% of GDP. A less generous GMI, like our alternative scenario, would only cost 0.35% of GDP (less than 2% of total expenditure on social protection) but would perform less strongly in terms of poverty reduction."

The Policy Analysis Research Unit is an informal group of staff and students at the Athens University of Economics and Business, co-ordinated by Manos Matsaganis. The NewsLetter series is produced by Kritiki Publishers and is supported by the EUROMODupdate2 project (which is funded by the European Commission). For more information, see http://www.kritiki.gr/paru/newsletters and www.paru.gr (email: info@paru.gr)

Image credit: 401kcalculator.org