Universal Basic Income: Effects of the Universal Basic Income (UBI) on the Labor Market

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This Master thesis consists of an in-depth analysis of the of the Universal Basic Income (UBI) topic and its impact on the labor market. Although funding and time constraints made it hard to conduct a pilot and gather primary data, the author performed a meta-analysis of eight completed experiments and pilots conducted in US, Canada, Brazil, Namibia, Kenya, Uganda, and India. After that, the results regarding the impact of the UBI on the labor market as well as general equilibrium effects were presented. Furthermore, using literature review and findings, the hypothesis stating that the UBI will have a positive impact on the labor market was verified. In conclusion, the thesis provides an evaluation of the research and gives some recommendations regarding the implementation of the UBI policy.

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Recent debates of basic income (BI) proposals shine a useful spotlight on the challenges that traditional forms of income support are increasingly facing, and highlight gaps in social provisions that largely depend on income or employment status. A universal “no questions asked” public transfer would be simple and have the advantage that no-one would be left without support. But an unconditional payment to everyone at meaningful but fiscally realistic levels would likely require tax rises as well as reductions in existing benefits. We develop a comprehensive BI scenario that facilitates an assessment of the resulting fiscal and distributional effects in a comparative context, undertake a microsimulation study to quantify them, and propose a simple decomposition to identify the mechanisms that drive effects in different country contexts. Results illustrate the challenges, but also the strengths, of existing social protection systems. A BI would fix benefit coverage gaps that exist in many countries, but would require very substantial tax rises if it were to be set at a meaningful level. As support would not be targeted on those most in need, it would not be a cost-effective way of directly reducing income poverty.
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This paper examines the impact of a guaranteed annual income experiment from the 1970s called the Manitoba Basic Annual Income Experiment (Mincome). We examine Mincome's "saturation" site located in Dauphin, Manitoba, where all town residents were eligible for payments. Would people work less if their basic needs were guaranteed outside the market? Never before or since the Dauphin experiment has a rich country tested a guaranteed annual income at the level of an entire town. A community-level experiment accounts for the fact that people make decisions in a social context, not in isolation. Using hitherto unanalyzed data we find an 11.3 percentage point reduction in labor market participation, and nearly 30 percent of that fall can be attributed to "community context" effects. Additionally, we show that withdrawals were driven disproportionately by young and single-headed households. Participants who provide qualitative explanations for work withdrawals typically cite care work, disability and illness, uneven employment opportunities, or educational investment. © The Author 2017. Published by Oxford University Press on behalf of the Society for the Study of Social Problems. All rights reserved.
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There is considerable debate about whether social protection programs providing transfers to households create disincentives for labor supply, but little attention is paid to the effect of programs on other forms of labor reallocation. This article estimates the impact of Brazil’s Bolsa Família program on several dimensions of household labor supply, using propensity-score-weighted regression. We find no disincentive effects on aggregate household labor supply but large effects on labor allocation between sectors and across household members. The program causes a substantial reallocation of labor hours from formal- to informal-sector work. We argue that this shift is plausibly induced by the program’s use of formal-sector income to determine means-tested eligibility. The shift toward informal work is observed only in urban areas, not in rural areas—a pattern consistent with larger formal/informal wage differentials in rural areas. We also find reallocation of labor hours from females to males in rural households, with potentially mixed implications for rural women’s time burden and decision-making power.
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Bioinstrumentation is one of the fastest growing industries, providing numerous solutions from clinical equipment to life-sustaining medical implants. Smart instruments can be divided into five categories, diagnostics, surgical, in vivo, remote patient monitoring, and patient or asset tracking. The electronics of a smart instrument are built around the biosensor. Diagnostic wireless bioinstruments have a much different set of requirements when compared to in vivo systems. Wireless threedimensional (3-D) gait motion systems can operate in bands such as the U.S. 900 MHz or 2.4 GHz ISM bands. the duration for which the device is intended to operate before battery replacement. Medical research institutes developed several instrumented implants with embedded sensors, electronics, telemetry, and inductive powering systems integrated into the joint replacement implant. Another interesting diagnostic tool utilizes the vibration of a joint to understand its 3-D kinematics during motion. A new approach to recover real time in vivo biomechanics was introduced recently with a constellation of A-mode ultrasound transducers and a set of inertial measurement units (IMU), which contain accelerometers, gyroscopes, and magnetometers. Wireless systems will play an integral role in the future of health-care technology and hospital infrastructure with pervasive wireless networks and devices becoming a reality inside the hospital and operating room while also pervading into remote locations such as the patient's home and workplace.
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As the debate on unconditional basic income, basic capital and cognate schemes matures, it has become necessary to rethink the idea of universalism in welfare policy. In this paper De Wispelaere (Lecturer in Equality Studies, University College Dublin) and Stirton (Lecturer in Law, University of East Anglia) argue that research should move beyond discussion of principles or ideal-type policy schemes, and get onto the details of concrete policy design and implementation. For the neglect of implementation issues risks impeding the political and administrative feasibility of universal basic income. To illustrate, the paper outlines seven dimensions along which concrete proposals vary, and suggests ways in which decisions on each dimension will determine the shape as well as the effects of the policy in practice.
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We study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of Swedish lottery players. Winning a lottery prize modestly reduces earnings, with the reduction being immediate, persistent, and quite similar by age, education, and sex. A calibrated dynamic model implies lifetime marginal propensities to earn out of unearned income from -0.17 at age 20 to -0.04 at age 60, and labor supply elasticities in the lower range of previously reported estimates. The earnings response is stronger for winners than their spouses, which is inconsistent with unitary household labor supply models.
The world's poor -- and programs to raise their incomes -- are increasingly concentrated in fragile states. We review the evidence on what interventions work, and whether stimulating employment promotes social stability. Skills training and microfinance have shown little impact on poverty or stability, especially relative to program cost. In contrast, injections of capital -- cash, capital goods, or livestock -- seem to stimulate self-employment and raise long term earning potential, often when partnered with low-cost complementary interventions. Such capital-centric programs, alongside cash-for-work, may be the most effective tools for putting people to work and boosting incomes in poor and fragile states. We argue that policymakers should shift the balance of programs in this direction. If targeted to the highest risk men, we should expect such programs to reduce crime and other materially-motivated violence modestly. Policymakers, however, should not expect dramatic effects of employment on crime and violence, in part because some forms of violence do not respond to incomes or employment. Finally, this review finds that more investigation is needed in several areas. First, are skills training and other interventions cost-effective complements to capital injections? Second, what non-employment strategies reduce crime and violence among the highest risk men, and are they complementary to employment programs? Third, policymakers can reduce the high failure rate of employment programs by using small-scale pilots before launching large programs; investing in labor market panel data; and investing in multi-country studies to test and fine tune the most promising interventions.
This article draws on innovation and agenda-setting theories to identify critical points in the realization of basic income in Finland. Our empirical data comprise 13 models of either unconditional basic income or social security reform proposals with some similarity to basic income. The models examined were published in Finland between 1984 and 2011. Using these data, we build a conceptual framework that enables us to discuss the role of the content, players, political and macro-economic context, and public interpretations in the successes and failures of the basic income initiatives.
This exceedingly simple idea has a surprisingly diverse pedigree. In the course of the last two centuries, it has been independently thought up under a variety of names-"territorial dividend" and "state bonus," for example, "demogrant" and "citizen's wage," "universal benefit" and "basic income"-in most cases without much success. In the late sixties and early seventies, it enjoyed a sudden popularity in the United States and was even put forward by a presidential candi-date, but it was soon shelved and just about forgotten. In the last two decades, however, it has gradually become the subject of an unprece-dented and fast expanding public discussion throughout the European Union. Some see it as a crucial remedy for many social ills, including unemployment and poverty. Others denounce it as a crazy, economi-cally flawed, ethically objectionable proposal, to be forgotten as soon as possible, to be dumped once and for all into the dustbin of the history of ideas. To shed light on this debate, I start off saying more about what basic income is and what it is not, and about what distinguishes it from existing guaranteed income schemes. On this background, it
Among the many ways in which welfare regimes differ, one is how they articulate the demands of work and welfare. Such a framework not only renders more coherent the familiar ‘three worlds of welfare capitalism’ but also highlights another option: a ‘post-productivist’ welfare regime, which combines generous social benefits and a relaxed attitude towards work requirements, aiming at ‘autonomy’ as its core value. Analysis of OECD data circa 1993 shows that a work–welfare classification successfully locates most of the countries in their traditional regime types. It also shows the Netherlands as an instance of the new regime type, effectively promoting the three key components of post-productivist autonomy: income adequacy, temporal adequacy and minimimal conditionality.
Why should I let the toad work Squat on my life? Can’t I use my wit as a pitchfork And drive the brute off? Six days of the week it soils With its sickening poison — Just for paying a few bills! That's out of proportion. From Philip Larkin, ‘Toads’. ABSTRACT This paper mounts a Rawlsian argument for unconditional basic income on the grounds that it maximins the distribution of income and wealth understood as a social basis of self-respect. The most important objection to this argument available to Rawlsians is that basic income violates the demands of reciprocity, where reciprocity in any scheme of distribution is a requirement of justice. The second half of the paper addresses this objection. It is argued there that even if the objection can be made successfully by Rawlsians (and this is not clear), it is not sufficient to divest them of a commitment to basic income, given some practical considerations about the implementation of alternatives to basic income.
In 1895 an English farmer diverted the course of a stream that was flowing through his land, thereby cutting off the supply to the water reservoir of the neighboring community. The courts established that it had been his purpose to "injure the plaintiffs by carrying off the water and to compel them to buy him off." Regardless of what the law says, most people will feel that the farmer's intentions were morally unjust; he was trying to abuse his property rights in order to take advantage of others. Yet, as Gijs van Donselaar explains, the major traditions in the theory of economic justice, both from the libertarian right and from the egalitarian left, have failed to appreciate the moral objection to exploitative behavior that this case displays. Those traditions entertain radically opposed views on how private property should be distributed, but they do not consider the legitimacy of constraints on the exercise of property rights-however they are distributed. The second part of the book demonstrates how this failure clears the way for a recent egalitarian argument, gaining in popularity, for a so-called unconditional basic income. If all have an initial right to an equal share of the resources of the world, then it soon seems to follow that all have a right to an equal share of the value of the resources of the world, which could be cashed in as a labor-free income. That inference is only valid if moral behavior similar to that of the farmer is tolerated. Van Donselaar argues that, ultimately, a confusion about the nature and value of freedom of choice is responsible for the odd conception of private rights in resources that would justify exploitation. Available in OSO:
It is universally agreed that involuntary unemployment is an evil for unemployed individuals, who lose both income and the non-pecuniary benefits of paid employment, and for society, which loses the productive labor that the unemployed are unable to expend. It is nearly as widely agreed that there is at least a prima-facie case for alleviating this evil – for reasons of justice and/or benevolence and/or social order. Finally, there is little doubt that the evils of involuntary unemployment cannot be adequately addressed in contemporary societies without state intervention – whether through monetary or fiscal policies, cash payments or other subsidies to the unemployed, direct provision of employment by the state, or some combination of these measures.
How can scholars select cases from a large universe for in-depth case study analysis? Random sampling is not typically a viable approach when the total number of cases to be selected is small. Hence attention to purposive modes of sampling is needed. Yet, while the existing qualitative literature on case selection offers a wide range of suggestions for case selection, most techniques discussed require in-depth familiarity of each case. Seven case selection procedures are considered, each of which facilitates a different strategy for within-case analysis. The case selection procedures considered focus on typical, diverse, extreme, deviant, influential, most similar, and most different cases. For each case selection procedure, quantitative approaches are discussed that meet the goals of the approach, while still requiring information that can reasonably be gathered for a large number of cases.
This survey reviews models of self-reinforcing mechanisms that cause poverty to persist. Some of them examine market failure in environments where the neoclassical assumptions on markets and technology break down. Other mechanisms include institutional failure which can, by itself, perpetuate self-reinforcing poverty. A common thread in all these mechanisms is their adverse impact on the acquisition of physical or human capital, and on the adoption of modern technology. The survey also reviews recent progress in the empirical poverty trap literature.
The cost of a negative income tax (NIT) designed to mimic the redistributive effects of a universal basic income (UBI) and set at a level sufficient to eliminate official poverty in the US is estimated using income distribution data for 2002. It is estimated that an NIT satisfying these conditions would have required an $826 billion increase in government spending in 2002, compared to a $1.69 trillion increase for an equivalent UBI. Despite this cost difference, the income and substitution effects of a UBI and an equivalent NIT are shown to be the same; and these effects are analyzed. Finally, the cost of providing a basic income guarantee (BIG) by either of these means is compared to the cost of securing the right to work and income security recognized in the Universal Declaration of Human Rights using a program of direct job creation and conventional income transfers.
In France, there is much debate about “minimum social benefits”, and basic income is still perceived as too daring a proposal, in particular because it is believed to encourage idleness. How can we predict how individuals would use this unconditional income? As regards low wage earners, we look first at the uncertainties surrounding the economic theory as to the behavioural changes that this could induce. This is followed by an econometric study of answers given in 2000 by a panel of poorly qualified young adults who had recently become employed.
In this paper I review the contribution of real business cycles models to our understanding of economic fluctuations, and discuss open issues in business cycle research.
This paper derives optimal income tax formulas using compensated and uncompensated elasticities of earnings with respect to tax rates. A simple formula for the high income optimal tax rate is obtained as a function of these elasticities and the thickness of the top tail of the income distribution. In the general non-linear income tax problem, this method using elasticities shows precisely how the different economic effects come into play and which are the key relevant parameters in the optimal income tax formulas of Mirrlees. The optimal non-linear tax rate formulas are expressed in terms of elasticities and the shape of the income distribution. These formulas are implemented numerically using empirical earning distributions and a range of realistic elasticity parameters.
This paper considers whether arguments presented in Philippe Van Parijs' Real Freedom for All: What (if Anything) Can Justify Capitalism? succeed in rebutting the objection that the introduction of a substantial unconditional basic income (UBI) would allow non-working citizens to free-ride on the efforts of, and so exploit, working citizens. It considers Van Parjis' ‘external assets argument’ for UBI, and finds that this argument does not succeed in reconciling payment of a substantial UBI with the reciprocity principle which underpins this ‘exploitation objection’. It considers and rejects Van Parijs' implicit claim that the exploitation objection must be grounded in a distributive principle which contradicts the egalitarian commitment to prevent brute luck inequality. It concludes that Van Parjis has failed, thus far, to articulate a convincing response to the exploitation objection.
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The Basic Income Grant in Namibia
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No strings attached: The behavioral effects of U.S. unconditional cash transfer programs. The Roosevelt Institute
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Is the Universal Basic Income Feasible and a Adequate Social Strategy for Fairness?
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Reciprocity and the guaranteed income
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Basic income, stakeholder grants, and class analysis
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