Lubrano

Publications

ELIE-Minating Poverty? Limits of the Mechanism and Potential ImprovementsBook chapterAlain Leroux et Justin Leroux, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 257-272, Springer Berlin Heidelberg, 2011

Using French data, we show that ELIE performs rather weakly when it comes to addressing the issue of poverty. Yet, eliminating poverty is also a valid normative property of any redistribution mechanism. We suggest combining ELIE with another redistributive solution aimed specifically at alleviating poverty: the personal allowance (PERAL) mechanism (Leroux 2004 and 2007). We argue that ELIE and the PERAL mechanism, more than being compatible, are in fact complementary.

Basic Income and ELIE Transfers: Argument for Compatibility Despite DivergenceBook chapterClaude Gamel, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 145-185, Springer Berlin Heidelberg, 2011

Van Parijs (1995) with basic income and Kolm (2005) with ELIE transfers have both revisited the ethical foundations and the redistributive patterns of the tax system. Despite being formally close, both propositions diverge because the financing of basic income is not really guaranteed and the treatment by ELIE transfers of “eccentric productive people” who choose not to work is not obvious. Both projects remain nevertheless compatible: from a philosophical point of view, Van Parijs tries to equalise individuals’ “external endowments”, while Kolm exploits only their “internal endowments”; from an economic point of view, TECIE transfers which would be based on “external endowments” could thus complete ELIE transfers stemming from “internal endowments”. The first examination of this “hybridisation” provides the framework of our conclusion.

The Trade-off Between Growth and Redistribution: ELIE in an Overlapping Generations ModelBook chapterDavid de la Croix et Michel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 305-337, Springer Berlin Heidelberg, 2011

The ELIE scheme of Kolm taxes labour capacities instead of labour income in order to circumvent the distortive effect of taxation on labour supply. Still, Kolm does not study the impact of ELIE on human capital formation and investment. In this paper, we build an overlapping generations (OLG) model with heterogenous agents and endogenous growth driven by investment in human capital. We study the effect of ELIE on education investment and other aggregate economic variables. Calibrating the model to French data, we highlight a trade-off between growth and redistribution. With a perfect credit market, ELIE is successful in reducing inequalities and poverty, but it is at the expense of lower investment in education and slower growth. In an economy with an imperfect credit market where individuals cannot borrow to educate, the trade-off between growth and redistribution is not overturned but is less severe. However, it is possible to overturn completely that trade-off simply by changing the base of taxation for the young generation which is equivalent to subsidising education.

The Trade-off Between Growth and Redistribution: ELIE in an Overlapping Generations ModelBook chapterDavid de la Croix et Michel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 305-337, Springer Berlin Heidelberg, 2011

The ELIE scheme of Kolm taxes labour capacities instead of labour income in order to circumvent the distortive effect of taxation on labour supply. Still, Kolm does not study the impact of ELIE on human capital formation and investment. In this paper, we build an overlapping generations (OLG) model with heterogenous agents and endogenous growth driven by investment in human capital. We study the effect of ELIE on education investment and other aggregate economic variables. Calibrating the model to French data, we highlight a trade-off between growth and redistribution. With a perfect credit market, ELIE is successful in reducing inequalities and poverty, but it is at the expense of lower investment in education and slower growth. In an economy with an imperfect credit market where individuals cannot borrow to educate, the trade-off between growth and redistribution is not overturned but is less severe. However, it is possible to overturn completely that trade-off simply by changing the base of taxation for the young generation which is equivalent to subsidising education.

The Redistributive Aspects of ELIE: A Simulation ApproachBook chapterMichel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 275-304, Springer Berlin Heidelberg, 2011

This paper analyses the problems linked to the implementation of the Equal Labour Income Equalisation (ELIE) scheme proposed by [Kolm, 2005]. It successively studies the influence of uncertainty in the information about individual incomes, the impact of equivalence scales and finally the consequences of capital accumulation. If uncertainty does not modify fundamentally the equity properties of ELIE, equivalence scales can have non trivial consequences depending on the relation between income and fertility. Finally, capital accumulation introduces strong inequalities in the income distribution which are not removed by taxation. The paper relies on simulations of the income distribution, calibrated on French data and on the use of taxation indices.

On Kolm's Theory of MacrojusticeBookClaude Gamel et Michel Lubrano (Eds.), 2011, Springer Berlin Heidelberg, 2011
The Redistributive Aspects of ELIE: A Simulation ApproachBook chapterMichel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 275-304, Springer Berlin Heidelberg, 2011

This paper analyses the problems linked to the implementation of the Equal Labour Income Equalisation (ELIE) scheme proposed by [Kolm, 2005]. It successively studies the influence of uncertainty in the information about individual incomes, the impact of equivalence scales and finally the consequences of capital accumulation. If uncertainty does not modify fundamentally the equity properties of ELIE, equivalence scales can have non trivial consequences depending on the relation between income and fertility. Finally, capital accumulation introduces strong inequalities in the income distribution which are not removed by taxation. The paper relies on simulations of the income distribution, calibrated on French data and on the use of taxation indices.

An Exploration of Incentive-Compatible ELIEBook chapterLaurent Simula et Alain Trannoy, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 207-231, Springer Berlin Heidelberg, 2011

[Simula and Trannoy, 2011] have shown that ELIE is confronted with implementation issues when the policymaker cannot observe the time worked by every individual. This paper tries to fix this problem. To this aim, we characterise the second-best allocations which are the closest to ELIE first in terms of welfare and then in terms of transfers. In the former perspective, we consider a welfarist setting in which the social weights are those required by ELIE to be generated as a first-best allocation. These weights are defined by the tangent hyperplane to the first-best Pareto set at the ELIE allocation. We show that, in the absence of income effect on labour supply, the closest solution to ELIE is the laissez-faire. In addition, simulations for a Cobb–Douglas economy show that the second-best transfers may then be substantially different from ELIE. This is why, in the latter perspective, we construct second-best allocations which are both incentive-compatible and generate net transfers coinciding with the first-best ELIE transfers. We show that the unique solution is Pareto-efficient in the constraint set.

Why Should We Debate the Theory of Macrojustice?Book chapterClaude Gamel et Michel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 1-32, Springer Berlin Heidelberg, 2011

In this introductory chapter, we give a subjective account of the content of Kolm’s book Macrojustice (2005) that gave rise to the idea of organising in 2006 a round table where this book was discussed by different authors coming from a large variety of horizons: philosophers, economists, econometricians. We leave Serge-Christophe Kolm the task of presenting his theory in the first part of this book. Macrojustice is concerned about social justice proposing a comprehensive redistributive scheme. Of course, any distributive proposal always raises questions at the ethical, theoretical and practical levels. These questions are at the core of the discussions that are presented in this book, which is designed as a forum for multidisciplinary exchange.

Why Should We Debate the Theory of Macrojustice?Book chapterClaude Gamel et Michel Lubrano, In: On Kolm's Theory of Macrojustice: A Pluridisciplinary Forum of Exchange, Claude Gamel et Michel Lubrano (Eds.), 2011, pp. 1-32, Springer Berlin Heidelberg, 2011

In this introductory chapter, we give a subjective account of the content of Kolm’s book Macrojustice (2005) that gave rise to the idea of organising in 2006 a round table where this book was discussed by different authors coming from a large variety of horizons: philosophers, economists, econometricians. We leave Serge-Christophe Kolm the task of presenting his theory in the first part of this book. Macrojustice is concerned about social justice proposing a comprehensive redistributive scheme. Of course, any distributive proposal always raises questions at the ethical, theoretical and practical levels. These questions are at the core of the discussions that are presented in this book, which is designed as a forum for multidisciplinary exchange.