Basic income and unemployment in a unionized economy

Bruno Van der Linden

No 1997014, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper develops a dynamic general equilibrium model of a unionized economy to analyze the impact of unconditional basic income schemes on unemployment. Starting from a given level of the unemployment benefits, two reforms are envisaged : one where these benefits are replaced by a higher unconditional grant (the full basic income) and another where the income of the unemployed remains unchanged (the partial basic income). Assuming a proportional tax on earnings and a balanced budget of the State, it is shown that the equilibrium unemployment rate decreases if a partial basic income is implemented. The same conclusion holds for a sufficiently small full basic income.

Keywords: Basic income; unconditional grant; wage bargaining; unemployment (search for similar items in EconPapers)
JEL-codes: H2 H3 J5 (search for similar items in EconPapers)
Pages: 25
Date: 1997-07-01, Revised 1997-07-10
New Economics Papers: this item is included in nep-lab and nep-pbe
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1997014

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