Universal Basic Income: A Dynamic Assessment

Diego Daruich and Raquel Fernández

American Economic Review, 2024, vol. 114, issue 1, 38-88

Abstract: Universal basic income (UBI) is an increasingly popular policy proposal, but there is no evidence regarding its longer-term consequences. We find that UBI generates large welfare losses in a general equilibrium model with imperfect capital markets, labor market shocks, and intergenerational linkages via skill formation and transfers. This conclusion is robust to various alternative ways of financing UBI. By using observationally equivalent models that eliminate different sources of endogenous dynamic linkages (equilibrium capital market and parental investment in child skills), we show that the latter are largely responsible for the negative welfare consequences.

JEL-codes: H24 H31 I38 J22 J24 J62 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Universal Basic Income: A Dynamic Assessment (2020)
Working Paper: Universal Basic Income: A Dynamic Assessment (2020)
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DOI: 10.1257/aer.20221099

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