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A modest basic income can benefit a poor majority

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  • Amir, Rabah
  • FitzRoy, Felix
  • Jin, Jim

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.

Suggested Citation

  • Amir, Rabah & FitzRoy, Felix & Jin, Jim, 2024. "A modest basic income can benefit a poor majority," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 537-547.
    • Handle: RePEc:eee:jeborg:v:224:y:2024:i:c:p:537-547
    DOI: 10.1016/j.jebo.2024.05.019
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    More about this item

    Keywords

    Basic income; Unemployment benefit; Linear tax;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • D30 - Microeconomics - - Distribution - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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