A modest basic income can benefit a poor majority

Rabah Amir, Felix FitzRoy and Jim Jin

Journal of Economic Behavior & Organization, 2024, vol. 224, issue C, 537-547

Abstract: Given a general utility and income distribution and positive unemployment benefits, we analyze the impact of a universal basic income (UBI) financed by an income tax and reducing unemployment benefits. With extensive margins only and identical fixed costs of work, we show that UBI can benefit a poor majority. Plausible conditions can ensure similar results with different fixed costs. With both extensive and intensive margins but identical fixed costs, a modest UBI can still benefit a poor majority provided the income weighted tax elasticity of labor supply from intensive margins is less than the non-employment rate, which is usually true.

Keywords: Basic income; Unemployment benefit; Linear tax (search for similar items in EconPapers)
JEL-codes: D30 D60 H20 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:224:y:2024:i:c:p:537-547

DOI: 10.1016/j.jebo.2024.05.019

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