IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/116151.html
   My bibliography  Save this paper

Macroeconomic effects of basic income funded by land holding tax

Author

Listed:
  • La, Jung Joo

Abstract

This study examines the macroeconomic effects of the introduction of a scheme to pay a basic income of approximately $900 per year to each citizen through land holding tax. In contrast to the existing literature, this study deals with the issue of whether household members decide to sell land due to a sharp increase in the land holding tax rate to raise funds for the payment of basic income. Furthermore, this study uses the relationship between holding assets and reservation wages to solve the problem of determining whether household members supply labor in accordance with the payment of basic income. Simulation results obtained using data for Korea show that the introduction of the scheme to pay the basic income decreases the real GDP, total labor demand, and social welfare by 1.3%, 0.3%, and 0.4%, respectively.

Suggested Citation

  • La, Jung Joo, 2023. "Macroeconomic effects of basic income funded by land holding tax," MPRA Paper 116151, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116151
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/116151/1/MPRA_paper_116151.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alice Fabre & Stéphane Pallage & Christian Zimmermann, 2014. "Universal Basic Income versus Unemployment Insurance," Cahiers de recherche 1427, CIRPEE.
    2. Jay H. Hong & Youngjae Lee & Taesu Kang, 2016. "Population Aging and Extension of Retirement Age (Quantitative Analysis using Overlapping Generation Model) (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 22(2), pages 1-49, June.
    3. Thomas Moutos & William Scarth, 2003. "Some Macroeconomic Consequences of Basic Income and Employment Subsidies," CESifo Working Paper Series 916, CESifo.
    4. Caamal-Olvera, Cinthya G. & Huesca, Luis & Llamas, Linda, 2022. "Universal basic income: A feasible alternative to move people out of poverty in Mexico?," Journal of Policy Modeling, Elsevier, vol. 44(5), pages 1077-1093.
    5. Kalkuhl, Matthias & Fernandez Milan, Blanca & Schwerhoff, Gregor & Jakob, Michael & Hahnen, Maren & Creutzig, Felix, 2018. "Can land taxes foster sustainable development? An assessment of fiscal, distributional and implementation issues," Land Use Policy, Elsevier, vol. 78(C), pages 338-352.
    6. Kamila Sommer & Paul Sullivan, 2018. "Implications of US Tax Policy for House Prices, Rents, and Homeownership," American Economic Review, American Economic Association, vol. 108(2), pages 241-274, February.
    7. Fernández-Villaverde, Jesús & Krueger, Dirk, 2011. "Consumption And Saving Over The Life Cycle: How Important Are Consumer Durables?," Macroeconomic Dynamics, Cambridge University Press, vol. 15(5), pages 725-770, November.
    8. Gregor Schwerhoff & Ottmar Edenhofer & Marc Fleurbaey, 2022. "Equity and Efficiency Effects of Land Value Taxation," IMF Working Papers 2022/263, International Monetary Fund.
    9. Magnani, Riccardo & Piccoli, Luca, 2020. "Universal basic income with flat tax reform in France," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 235-249.
    10. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2000. "Sticky Price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem?," Econometrica, Econometric Society, vol. 68(5), pages 1151-1180, September.
    11. Rema Hanna & Benjamin A. Olken, 2018. "Universal Basic Incomes versus Targeted Transfers: Anti-Poverty Programs in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 201-226, Fall.
    12. Jay H. Hong & Choonsung Park & Joon Song, 2020. "Accounting for Changes in House Prices and Rent in Korea, 2001–2016," Korean Economic Review, Korean Economic Association, vol. 36, pages 249-283.
    13. Byoung Hoon Seok & Hye Mi You, 2021. "On the Long-Term Effect of Recent Housing Policies in Korea," Korean Economic Review, Korean Economic Association, vol. 37, pages 199-223.
    14. Bruno Van der Linden, 2004. "Active citizen's income, unconditional income and participation under imperfect competition: a welfare analysis," Oxford Economic Papers, Oxford University Press, vol. 56(1), pages 98-117, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Nakajima, Makoto, 2020. "Capital income taxation with housing," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    3. Islam, Nizamul & Colombino, Ugo, 2018. "The case for NIT+FT in Europe. An empirical optimal taxation exercise," Economic Modelling, Elsevier, vol. 75(C), pages 38-69.
    4. Byoung Hoon Seok & Hye Mi You, 2021. "On the Long-Term Effect of Recent Housing Policies in Korea," Korean Economic Review, Korean Economic Association, vol. 37, pages 199-223.
    5. Nizamul Islam & Ugo Colombino, 2018. "The case for negative income tax with flat tax in Europe. An empirical optimal taxation exercise," Working Papers 454, ECINEQ, Society for the Study of Economic Inequality.
    6. Andre Luduvice, 2021. "The Macroeconomic Effects of Universal Basic Income Programs," Working Papers 21-21, Federal Reserve Bank of Cleveland.
    7. Musy, Olivier, 2006. "Inflation persistence and the real costs of disinflation in staggered prices and partial adjustment models," Economics Letters, Elsevier, vol. 91(1), pages 50-55, April.
    8. Richard Clarida & Jordi Galí & Mark Gertler, 2000. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(1), pages 147-180.
    9. Aydilek, Asiye, 2016. "The allocation of time and puzzling profiles of the elderly," Economic Modelling, Elsevier, vol. 53(C), pages 515-526.
    10. Aadland, David & Huang, Kevin X. D., 2004. "Consistent high-frequency calibration," Journal of Economic Dynamics and Control, Elsevier, vol. 28(11), pages 2277-2295, October.
    11. Ichiro Fukunaga, 2007. "Imperfect Common Knowledge, Staggered Price Setting, and the Effects of Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(7), pages 1711-1739, October.
    12. Röhrs, Sigrid & Winter, Christoph, 2017. "Reducing government debt in the presence of inequality," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 1-20.
    13. Yongsung Chang & Mark Bils, 2002. "Cyclical Movements in Hours and Effort under Sticky Wages," Macroeconomics 0204004, University Library of Munich, Germany.
    14. Torben M. Andersen, 2003. "Wage formation and European integration," European Economy - Economic Papers 2008 - 2015 188, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    15. Ugo Colombino & Nizamul Islam, 2021. "Combining microsimulation and optimization to identify optimal universalistic tax-transfer rule," LISER Working Paper Series 2021-06, Luxembourg Institute of Socio-Economic Research (LISER).
    16. Michael T. Kiley, 1997. "Staggered price setting and real rigidities," Finance and Economics Discussion Series 1997-46, Board of Governors of the Federal Reserve System (U.S.).
    17. Kevin X. D. Huang & Zheng Liu, 1999. "Chain of Production as a Monetary Propagation Mechanism," Cahiers de recherche CREFE / CREFE Working Papers 106, CREFE, Université du Québec à Montréal.
    18. Ferriere, Axelle, 2020. "Comments on “Capital income taxation with housing”," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    19. Oleksiy Kryvtsov & Virgiliu Midrigan, 2010. "Inventories and Real Rigidities in New Keynesian Business Cycle Models," NBER Chapters, in: Sticky Prices and Inflation Dynamics (NBER-TCER-CEPR), pages 259-281, National Bureau of Economic Research, Inc.
    20. Coenen, Gunter & Wieland, Volker, 2005. "A small estimated euro area model with rational expectations and nominal rigidities," European Economic Review, Elsevier, vol. 49(5), pages 1081-1104, July.

    More about this item

    Keywords

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

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:116151. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.