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Basic Income and Labor Supply: The German Case

Author

Listed:
  • B. Michael Gilroy

    (University of Paderborn)

  • Mark Schopf

    (University of Paderborn)

  • Anastasia Semenova

    (University of Paderborn)

Abstract

This paper deals with the effects of implementing a basic income on the labor supply side. 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 labor supply side reactions to a basic income policy, we use the neoclassical labor supply model and adapt it for 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 labor supply model without intrinsic work motivation, the basic income increases the participation rate in the labor market. Furthermore, current employees are partially incited to increase their labor supply. Therefore, a basic income would not only reduce unemployment but could also expand the magnitude of employment.

Suggested Citation

  • B. Michael Gilroy & Mark Schopf & Anastasia Semenova, 2012. "Basic Income and Labor Supply: The German Case," Working Papers CIE 54, Paderborn University, CIE Center for International Economics.
    • Handle: RePEc:pdn:ciepap:54
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    References listed on IDEAS

    as
    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. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Verena Löffler, 2021. "Questioning the feasibility and justice of basic income accounting for migration," Politics, Philosophy & Economics, , vol. 20(3), pages 273-314, August.
    6. 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.
    7. 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.
    8. Mencinger Jože, 2017. "Universal Basic Income and Helicopter Money," Basic Income Studies, De Gruyter, vol. 12(2), pages 1-8, December.
    9. 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.

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    More about this item

    Keywords

    Basic Income; Neoclassical Labor 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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