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Universal basic income: inspecting the mechanisms

Jaimovich, Nir; Saporta-Eksten, Itay; Setty, Ofer; Yedid-Levi, Yaniv (2022). Universal basic income: inspecting the mechanisms. URPP Equality of Opportunity Discussion Paper Series 3, University of Zurich.

Abstract

We consider the aggregate and distributional impact of Universal Basic Income (UBI). We develop a model to study a wide range of UBI programs and financing schemes and to highlight the key mechanisms behind their impact. The most crucial channel is the rise in distortionary taxation (required to fund UBI) on labor force participation. Second in importance is the decline in self-insurance due to the insurance UBI provides, resulting in lower aggregate capital. Third, UBI creates a positive income effect lowering labor force participation. Alternative tax-transfer schemes mitigate the impact on labor force participation and the cost of UBI.

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > URPP Equality of Opportunity Discussion Paper Series
08 Research Priority Programs > Equality of Opportunity
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Universal Basic Income, labor force participation, inequality
Scope:Discipline-based scholarship (basic research)
Language:English
Date:March 2022
Deposited On:11 Aug 2022 10:33
Last Modified:06 Mar 2024 14:37
Series Name:URPP Equality of Opportunity Discussion Paper Series
Number of Pages:25
OA Status:Green
Official URL:https://www.urpp-equality.uzh.ch/dam/jcr:59442fe5-b6c4-4201-9152-c80a627d5c06/JaimovichSaportaSettyYedid_UBI.pdf
Related URLs:https://www.urpp-equality.uzh.ch/en/Publications.html
Other Identification Number:merlin-id:22599
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