The paper analyses the impact of a guaranteed minimum income (GMI) scheme on the labour supply of partners, at the household level. Since the GMI is traditionally linked to the income of the whole household, the monetary incentives to work also depend on the employment status and income of the other household members. The analysis estimates the impact of a GMI in Italy, where there is a high incidence of single-income households due to low female employment.
The GMI introduces strong complementarities into the work decisions of partners that are absent from individual income schemes such as unemployment benefits: in our simulations, it pushed partners to either both be employed or both non-employed. Compared with an individual type of transfer that reduces inequality to a similar extent, the GMI has a more limited impact on employment and is restricted to low-income households with only one earner (usually the male partner).
