Efficient redistribution: Comparing basic income with unemployment benefit

Felix FitzRoy and Jim Jin ()

No 107, HWWI Research Papers from Hamburg Institute of International Economics (HWWI)

Abstract: Given a general utility function and income distribution, we compare two systems of income redistribution: unemployment benefits (UB) conditional on not working and basic income (BI) available to everyone. Based on strong empirical evidence we first focus on extensive margins of labor supply. For any given unemployment level, 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. Similar results hold even if we allow involuntary unemployment or intensive margins.

Keywords: basic income; unemployment benefits; extensive margins (search for similar items in EconPapers)
JEL-codes: D40 H20 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Efficient Redistribution: Comparing Basic Income with Unemployment Benefits (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hwwirp:107

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