Universal Basic Income: A Dynamic Assessment
Diego Daruich, Raquel Fernández
American Economic Review · 2024 · Volume 114 · Issue 1
Abstract
Universal basic income (UBI) is an increasingly popular policy proposal, but there is no evidence regarding its longer-term consequences. We find that UBI generates large welfare losses in a general equilibrium model with imperfect capital markets, labor market shocks, and intergenerational linkages via skill formation and transfers. This conclusion is robust to various alternative ways of financing UBI. By using observationally equivalent models that eliminate different sources of endogenous dynamic linkages (equilibrium capital market and parental investment in child skills), we show that the latter are largely responsible for the negative welfare consequences.
Keywords
Personal Income and Other Nonbusiness Taxes and Subsidies, includes inheritance and gift taxes, Fiscal Policies and Behavior of Economic Agents: Household, Welfare, Well-Being, and Poverty: Government Programs, Provision and Effects of Welfare Programs, Time Allocation and Labor Supply, Human Capital, Skills, Occupational Choice, Labor Productivity, Job, Occupational, and Intergenerational Mobility, Promotion
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