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Basic income and unemployment in a unionized economy

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  • Van der Linden, Bruno

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))

Abstract

This 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 Info

Paper 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.

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Length: 25
Date of creation: 01 Jul 1997
Date of revision: 10 Jul 1997
Handle: RePEc:ctl:louvir:1997014

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Keywords: Basic income; unconditional grant; wage bargaining; unemployment;

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References

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  1. Layard, Richard & Nickell, Stephen, 1990. "Is Unemployment Lower if Unions Bargain over Employment?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(3), pages 773-87, August.
  2. repec:ant:wpaper:1993012 is not listed on IDEAS
  3. Huizinga, F & Schiantarelli, Fabio, 1992. "Dynamics and Asymmetric Adjustment in Insider-Outsider Models," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 102(415), pages 1451-66, November.
  4. KÉSENNE, Stefan, 1993. "The unemployment impact of a basic income," SESO Working Papers, University of Antwerp, Faculty of Applied Economics 1993012, University of Antwerp, Faculty of Applied Economics.
  5. Alan Manning, 1992. "Wage Bargaining and the Phillips Curve: The Identification and Specification of Aggregate Wage Equations," CEP Discussion Papers dp0062, Centre for Economic Performance, LSE.
  6. Burda, Michael & Wyplosz, Charles, 1994. "Gross worker and job flows in Europe," European Economic Review, Elsevier, Elsevier, vol. 38(6), pages 1287-1315, June.
  7. James Meade., . "Agathotopia," Hume Papers, David Hume Institute 16, David Hume Institute.
  8. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198284345, October.
  9. Manning, Alan, 1991. "The Determinants of Wage Pressure: Some Implications of a Dynamic Model," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 58(231), pages 325-39, August.
  10. Dor, E. & Van der Linden, B. & Lopez-Novella, M., 1995. "On Labour Market Policies and Aggregate Unemployment Outflows," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 1995015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  11. Bowles, Samuel, 1992. "Is income security possible in a capitalist economy? : An agency-theoretic analysis of an unconditional income grant," European Journal of Political Economy, Elsevier, vol. 8(4), pages 557-578, December.
  12. Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, Elsevier, vol. 52(1), pages 1-29, August.
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Cited by:
  1. Brigitte van Baalen & Tobias Müller, 2005. "Social welfare effects of tax-benefit reform under endogenous participation and unemployment," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva, Institut d'Economie et Econométrie, Université de Genève 2005.03, Institut d'Economie et Econométrie, Université de Genève.
  2. Van der Linden, Bruno, 1999. "Active Citizen's Income, Unconditional Income and Participation under Imperfect Competition: A Normative Analysis," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 1999023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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