Efficient Redistribution: Comparing Basic Income with Unemployment Benefits

Felix FitzRoy and Jim Jin ()

No 5236, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We compare two systems of income redistribution: unemployment benefits (UB) and basic income (BI). First, for a simple utility function, with both intensive and extensive margins, the unemployed are likely better off with pure BI than pure UB, regardless of labour supply elasticity and wage distribution. Then we allow a general utility function and ignore intensive margins. For given unemployment, lowering UB and raising BI always benefits the unemployed, raises utilitarian welfare and benefits a poor majority. Reducing unemployment and UB simultaneously can benefit a majority of the employed as well as all unemployed, again for any wage distribution.

Keywords: income distribution; basic income; unemployment benefits (search for similar items in EconPapers)
JEL-codes: D40 H20 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2010-10
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (1)

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Working Paper: Efficient redistribution: Comparing basic income with unemployment benefit (2011)
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