Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252182 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15058
Publisher: 
Institute of Labor Economics (IZA), Bonn
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.
Subjects: 
universal basic income
labor force participation
inequality
JEL: 
E2
E6
J08
Document Type: 
Working Paper

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