A Modest Basic Income Can Benefit a Poor Majority

Rabah Amir

Research output: Contribution to journalArticlepeer-review

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 languageEnglish
Pages (from-to)537-547
Number of pages11
JournalJournal of Economic Behavior and Organization
Volume224
Publication statusPublished - Aug 2024

Keywords

  • basic income
  • unemployment benefit
  • linear tax

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