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Minimum Wage, Unemployment Insurance and Universal Basic Income in a Wealth Concentration Process: A Theoretical Approach

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  • Carlos Humberto Ortiz-Quevedo

    (Universidad del Valle)

Abstract

Ortiz and Castillo (2020) built a multisector economic model where concentration of capital ownership diminishes the society´s purchasing power capacity. After some concentration threshold is overcome, labour unemployment rises due to the lack of effective demand, the wage rate must be set to the minimum, and distribution of income shifts in favour of capital. Based on that approach, this paper analyses two alternative policies: an unemployment insurance and a universal basic income. The unemployment insurance program is fairer than the competitive outcome but it is not efficient, whilst the optimal universal basic income is fairer and efficient. An minimum wage rate that minimizes the unemployment rate is also found.

Suggested Citation

  • Carlos Humberto Ortiz-Quevedo, 2023. "Minimum Wage, Unemployment Insurance and Universal Basic Income in a Wealth Concentration Process: A Theoretical Approach," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 98, pages 7-37, January-J.
    • Handle: RePEc:lde:journl:y:2023:i:98:p:7-37
    DOI: 10.17533/udea.le.n98a348515
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    More about this item

    Keywords

    non-homothetic and satiable preferences; increasing returns; capital ownership concentration; purchasing power capacity; unemployment insurance; universal basic income;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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