HEC Research Papers Series,
HEC Paris

Abstract: In 2009, France is expected to create a new minimum income guarantee called "revenu de solidarité active" (RSA) in order to replace several existing programmes. It should benefit those in work according to a degressive schedule that reminds one of the negative income tax or universal basic income projects. The paper attempts to offer a compact answer to the many questions raised by this major change in the national welfare system. After summing up the theoretical and historical context, it elaborates on the three arguments for RSA – rationalization, incentives, and redistribution – and finally concludes by making concrete proposals on how to implement it.

Keywords: revenu de solidarité active (RSA); negative income taxation; universal basic grant; welfare system; guaranteed income; incentives; redistribution

JEL-codes: D12; D13; D14

36 pages, September 1, 2008

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