POLICY ANALYSIS RESEARCH UNIT

Department of International and European Economic Studies
Athens University of Economics and Business



Newsletter 3/2012

Simulating a guaranteed minimum income for Greece
By Manos Matsaganis & Chrysa Leventi

Greece is one of very few EU countries lacking a broad-based social assistance programme of last resort (acting as guaranteed minimum income). This could change: 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. In his NewsLetter we use EUROMOD in order to estimate the fiscal and distributional impact of such a scheme. We hypothesise two versions of 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 full text of the Newsletter is available here (in Greek).