A Low Wage Subsidy Scheme Against Unemployment of Low-Skilled Workers

The reduction of the high mass unemployment is on top of the political agenda in various countries. Especially low-skilled workers with low wages suffer from this mass unemployment. Therefore, we propose a basic income scheme/low wage subsidy scheme for low-skilled workers to help them find a new job or to keep their endangered job. Based on microsimulation calculations we estimate the fiscal, labour supply and distributional effects of different reform scenarios. Furthermore, we show that employment enhancing scenarios can be financed in a revenue-neutral way under certain conditions