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Basic Income and Labour Supply: The German Case

Author

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  • Gilroy Bernard Michael

    (University of Paderborn, Paderborn, Germany)

  • Heimann Anastasia

    (University of Paderborn, Paderborn, Germany)

  • Schopf Mark

    (University of Paderborn, Paderborn, Germany)

Abstract

This paper deals with labour supply side effects of implementing an unconditional basic income scheme. Specifically, the German welfare as well as tax and social contributions system are investigated. The results clarify that the abolishment of the so-called unemployment trap due to a basic income policy is a decisive advantage of this approach. In order to demonstrate possible labour supply side reactions to a basic income policy, we use the neoclassical labour supply model and adapt it to our purposes. We compare the effects of implementing a basic income on different types of employees concerning their consumption preferences. We show that, even in the neoclassical labour supply model without intrinsic work motivation, an unconditional basic income increases the participation rate in the labour market. Furthermore, current employees are given only partial incentives to increase their labour supply. Therefore, a basic income not only would reduce unemployment but also could expand the magnitude of employment

Suggested Citation

  • Gilroy Bernard Michael & Heimann Anastasia & Schopf Mark, 2013. "Basic Income and Labour Supply: The German Case," Basic Income Studies, De Gruyter, vol. 8(1), pages 43-70, July.
    • Handle: RePEc:bpj:bistud:v:8:y:2013:i:1:p:43-70:n:3
    DOI: 10.1515/bis-2012-0009
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    References listed on IDEAS

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    1. Standing Guy, 2008. "How Cash Transfers Promote the Case for Basic Income," Basic Income Studies, De Gruyter, vol. 3(1), pages 1-30, July.
    2. Hohenleitner, Ingrid & Straubhaar, Thomas, 2008. "Bedingungsloses Grundeinkommen und Solidarisches Bürgergeld - mehr als sozialutopische Konzepte," Edition HWWI: Chapters, in: Straubhaar, Thomas (ed.), Bedingungsloses Grundeinkommen und Solidarisches Bürgergeld - mehr als sozialutopische Konzepte, volume 1, pages 9-127, Hamburg Institute of International Economics (HWWI).
    3. Schramm, Michael, 2008. "Subsidiäre Befähigungsgerechtigkeit durch das Solidarische Bürgergeld," Edition HWWI: Chapters, in: Straubhaar, Thomas (ed.), Bedingungsloses Grundeinkommen und Solidarisches Bürgergeld - mehr als sozialutopische Konzepte, volume 1, pages 177-218, Hamburg Institute of International Economics (HWWI).
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    Cited by:

    1. B. Michael Gilroy & Mark Schopf & Anastasia Semenova, 2012. "Grundeinkommen und Arbeitsangebot: Die Perspektive Deutschlands," Working Papers CIE 57, Paderborn University, CIE Center for International Economics.
    2. Mencinger Jože, 2017. "Universal Basic Income and Helicopter Money," Basic Income Studies, De Gruyter, vol. 12(2), pages 1-8, December.
    3. Fischer Yannick, 2020. "Basic Income, Labour Automation and Migration – An Approach from a Republican Perspective," Basic Income Studies, De Gruyter, vol. 15(2), pages 1-034, December.
    4. Joze Mencinger, 2015. "The Revenue Side of a Universal Basic Income in the EU and Euro Area," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 3, pages 159-174, September.
    5. Palermo Kuss, Ana Helena, 2019. "Testing preferences for basic income," The Constitutional Economics Network Working Papers 01-2019, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
    6. Bernard Michael Gilroy & Julia Günthner, 2017. "The German Precariat and the Role of Fundamental Security - Is the Unconditional Basic Income a Possible Solution for the Growing Precarity in Germany?," Working Papers CIE 109, Paderborn University, CIE Center for International Economics.
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    8. Palermo Kuss Ana Helena & Neumärker K. J. Bernhard, 2018. "Modelling the Time Allocation Effects of Basic Income," Basic Income Studies, De Gruyter, vol. 13(2), pages 1-15, December.

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    More about this item

    Keywords

    basic income; neoclassical labour supply; unemployment trap;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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