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Efficient Redistribution: Comparing Basic Income with Unemployment Benefits

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  • FitzRoy, Felix

    (University of St. Andrews)

  • Jin, Jim

    (University of St. Andrews)

Abstract

We compare two systems of income redistribution: unemployment benefits (UB) and basic income (BI). First, for a simple utility function, with both intensive and extensive margins, the unemployed are likely better off with pure BI than pure UB, regardless of labour supply elasticity and wage distribution. Then we allow a general utility function and ignore intensive margins. For given unemployment, lowering UB and raising BI always benefits the unemployed, raises utilitarian welfare and benefits a poor majority. Reducing unemployment and UB simultaneously can benefit a majority of the employed as well as all unemployed, again for any wage distribution.

Suggested Citation

  • FitzRoy, Felix & Jin, Jim, 2010. "Efficient Redistribution: Comparing Basic Income with Unemployment Benefits," IZA Discussion Papers 5236, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5236
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Basic income vs capitalism
      by chris dillow in Stumbling and Mumbling on 2013-07-02 18:34:26

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    Cited by:

    1. Hohenleitner, Ingrid & Hillmann, Katja, 2012. "Impact of Benefit Sanctions on Unemployment Outflow - Evidence from German Survey Data," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 66055, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    income distribution; basic income; unemployment benefits;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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