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The Basic Income Guarantee: A General Equilibrium Evaluation


  • Yunker James A.

    (Department of Economics, Western Illinois University, Macomb, IL 61455, USA)


The potential economic effects of implementing a Basic Income Guarantee (BIG) in the United States are examined using a small-scale computable general equilibrium model in which labor and saving are the fundamental household decision variables. The social choice variables consist of BIG (termed herein “guaranteed minimum consumption”) and public good expenditure. Assuming the model’s benchmark values for the social choice variables are a reasonable approximation to the current situation, solution for the optimal social choice variables suggests that a much larger BIG would be preferable from a social welfare standpoint. This basic result is relatively insensitive to alterations in the model’s parameters. However, there would be such a substantial reduction in aggregate output and saving from moving to the optimal position that the political feasibility of any such policy shift is doubtful, regardless of any indications from economic analysis.

Suggested Citation

  • Yunker James A., 2013. "The Basic Income Guarantee: A General Equilibrium Evaluation," Basic Income Studies, De Gruyter, vol. 8(2), pages 1-31, December.
  • Handle: RePEc:bpj:bistud:v:8:y:2013:i:2:p:31:n:2
    DOI: 10.1515/bis-2013-0014

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    References listed on IDEAS

    1. Karl Widerquist & Michael A. Lewis, 1997. "An Efficiency Argument for the Guaranteed Income," Economics Working Paper Archive wp_212, Levy Economics Institute.
    2. Yunker, James A, 1994. "Evaluating Changes in the Distribution of Capital Wealth," Economic Inquiry, Western Economic Association International, vol. 32(4), pages 597-615, October.
    3. James Yunker, 2007. "A Comprehensive Incentives Analysis of the Potential Performance of Market Socialism," Review of Political Economy, Taylor & Francis Journals, vol. 19(1), pages 81-113.
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