Universal Basic Income versus Unemployment Insurance

Alice Fabre, Stephane Pallage and Christian Zimmermann

Working Paper series from Rimini Centre for Economic Analysis

Abstract: In this paper we compare the welfare effects of unemployment insurance (UI) with an universal basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies provide a safety net in the face of idiosyncratic shocks. While the unemployment insurance program should do a better job at protecting the unemployed, it suffers from moral hazard and substantial monitoring costs, which may threaten its usefulness. The universal basic income, which is simpler to manage and immune to moral hazard, may represent an interesting alternative in this context. We work within a dynamic equilibrium model with savings calibrated to the United States for 1990 and 2011, and provide results that show that UI beats UBI for insurance purposes because it is better targeted towards those in need.

Date: 2014-11
New Economics Papers: this item is included in nep-dge and nep-ias
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Universal Basic Income versus Unemployment Insurance (2014)
Working Paper: Universal Basic Income versus Unemployment Insurance (2014)
Working Paper: Universal Basic Income versus Unemployment Insurance (2014)
Working Paper: Universal Basic Income versus Unemployment Insurance (2014)
Working Paper: Universal Basic Income versus Unemployment Insurance (2014)
Working Paper: Universal Basic Income versus Unemployment Insurance (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:26_14

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