The Impact of a "Minimum Guaranteed Income Program" in Portugal (Portuguese Minimum Guaranteed Income Program ‪)‬

Abstract The purpose of this paper is to estimate the impact of the Portuguese Minimum Guaranteed Income Program (RMIG) on the distribution of household incomes, poverty, and the size of government expenditures necessary to finance the program. The baseline adopted is constructed under the assumption of no behavioural responses to the transfer mechanism and of total participation of all eligible households. The Program has small but positive impacts both in reducing inequality and on the poverty rate for individuals. These gains are almost cancelled when labour supply reactions are taken into account. However, the most important consequences of the RMIG are sharp gains in the measures of poverty severity and intensity. In these dimensions, taking into account the labour supply incentives of the RMIG does not reduce substantially the positive impacts of the Program.