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The macroeconomic effects of basic income funded by a land-holding tax in Korea

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  • La, Jung Joo

Abstract

We examine the macroeconomic effects of the introduction of a scheme to pay a basic income of approximately $900 per year to each citizen through a land-holding tax. Unlike other studies, we address the issue of whether a sharp increase in the land-holding tax rate intended to raise funds for a basic income scheme causes landowners to sell their land. We also use the relationship between holding assets and reservation wages to determine whether household members supply their labor in accordance with the payment of basic income. Our simulation results obtained using data for Korea show that the introduction of the basic income scheme decreases real gross domestic product, total labor demand, and social welfare by 1.3%, 0.3%, and 0.4%, respectively.

Suggested Citation

  • La, Jung Joo, 2023. "The macroeconomic effects of basic income funded by a land-holding tax in Korea," Journal of Policy Modeling, Elsevier, vol. 45(1), pages 1-9.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:1:p:1-9
    DOI: 10.1016/j.jpolmod.2023.02.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Basic income; Land-holding tax; Macroeconomic effects;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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