Project description
Rethinking low-income support policy
Minimum wages, taxes and transfers are the primary policy tools to boost income for the working poor. However, despite their pervasive adoption and extensive research on them, there are important questions that remain unanswered. Is having a minimum wage at all justified when governments can redistribute with taxes? If so, what is the appropriate minimum wage level to lift incomes without hurting employment? And what policy mix is more socially and politically acceptable to support the working poor? The ERC-funded LIFT-UP project aims at breaking new ground in our understanding of how to best design core in-work antipoverty tools, examining both their economic and distributional implications and their political and social feasibility.
Objective
Minimum wages and taxes and transfers are prominent examples of pre and redistributive policies in the area of low pay in Europe and the U.S.
Despite their pervasive coexistence and extensive research on their effects, the two have been mostly studied in isolation. This has limited our ability to evaluate their interplay in the labor market and identify joint design options to effectively support the working poor. With these goals, our first contribution is to examine the pre and redistributive components of low-income support jointly. We will develop an empirically grounded model of the low-wage labor market, which can be used to evaluate the impact of alternative joint designs of minimum wages and taxes on labor market equilibrium in a realistic way. This requires new empirical evidence on how the two interact and on the fundamental features of the market environment in which they operate.
Minimum wages are widely popular, although according to standard normative theory their existence is not justified if governments can redistribute with taxes. Why, then, are minimum wages so socially and politically successful? Our second contribution is to uncover what drives support for pre and redistribution to the working poor. Besides enriching our knowledge of the political feasibility of reforms in this area, evidence on policy preferences will be central to characterizing an optimal redistribution policy based on a new notion of welfare desirability, which considers not only the material interest of individuals as market participants, but also their policy preferences as citizens.
Academically, this is groundbreaking since it overcomes multiple empirical and theoretical divides in both positive and normative analysis, with the end goal of characterizing the optimal configuration of low-income support policies. Practically, it will provide guidance for concrete reform actions, highlighting their economic and distributional implications and their political feasibility.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
This project's classification has been human-validated.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
This project's classification has been human-validated.
Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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HORIZON.1.1 - European Research Council (ERC)
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Topic(s)
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Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
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Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
HORIZON-ERC - HORIZON ERC Grants
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Call for proposal
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Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2025-STG
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20136 Milano
Italy
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