Labor Supply Responses Of Italian Women To Minimum Income Policies

Minimum income policies are policies aimed at guarantee all citizens with a minimum level of income and at fighting social exclusion typically associated with extreme poverty. Theoretically, their main shortcoming is the disincentive effect on labor market participation they could generate in the bottom part of income distribution, due to the high effective marginal tax rate they impose around the threshold level. This paper employs a structural labor supply model under discrete choices to test the existence and the magnitude of this disincentive effect on Italian female labor supply.