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.
| Original language | English |
|---|---|
| Pages (from-to) | 537-547 |
| Number of pages | 11 |
| Journal | Journal of Economic Behavior and Organization |
| Volume | 224 |
| DOIs | |
| Publication status | Published - 27 Jun 2024 |
Keywords
- basic income
- unemployment benefit
- linear tax
Access to Document
- Amir_2024_JEBO_A-modest-basic-income_AAM_CCBY
Copyright © XXXX the Authors. This work has been made available online in accordance with the University of St Andrews Open Access policy. This accepted manuscript is distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. The final published version of this work is available at https://doi.org/10.1016/j.jebo.2024.05.019