Basic income and unemployment in a unionized economy
AbstractThis paper develops a dynamic general equilibrium model of a unionized economy to analyze the impact of unconditional basic income schemes on unemployment. Starting from a given level of the unemployment benefits, two reforms are envisaged : one where these benefits are replaced by a higher unconditional grant (the full basic income) and another where the income of the unemployed remains unchanged (the partial basic income). Assuming a proportional tax on earnings and a balanced budget of the State, it is shown that the equilibrium unemployment rate decreases if a partial basic income is implemented. The same conclusion holds for a sufficiently small full basic income.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1997014.
Date of creation: 01 Jul 1997
Date of revision: 10 Jul 1997
Basic income; unconditional grant; wage bargaining; unemployment;
Find related papers by JEL classification:
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-09-30 (All new papers)
- NEP-LAB-2002-02-10 (Labour Economics)
- NEP-PBE-2002-02-10 (Public Economics)
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