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Basic income, unemployment and job scarcity

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  • Loek Groot

Abstract

The main claim of this paper is that in a world of equal entitlements to work rights the justification for a basic income is stronger, and that its level should be higher. the higher the level of unemployment or job scarcity. Point of departure is an economy with job scarcity. A fair way to deal with job scarcity is to grant everybody an equal right to work, where these rights can be freely traded. It turns out that such a Labour Rights scheme and a basic income scheme are equivalent. The equivalence is that the price of Labour Rights and the unemployment benefit corresponds to the income tax rate and basic income respectively. The tax rate can thus be considered as what workers have to pay to appropriate scarce job assets. Both schemes allow that some people voluntarily abstain from doing paid work, in return for a financial compensation. Therefore, the advantages in terms of equity and efficiency of a Labour Rights scheme equally apply to the basic income proposal. This analysis provides an argument against cutting unemployment and social assistance benefits during economic downturns and it offers new insights to evaluate the parasitism and exploitation objection raised against basic income.
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Suggested Citation

  • Loek Groot, 2004. "Basic income, unemployment and job scarcity," Recherches économiques de Louvain, De Boeck Université, vol. 70(3), pages 369-387.
  • Handle: RePEc:cai:reldbu:rel_703_369
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    References listed on IDEAS

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    1. Luski, Israel & Wettstein, David, 1994. "The provision of public goods via advertising : Existence of equilibria and welfare analysis," Journal of Public Economics, Elsevier, pages 309-321.
    2. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
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    Cited by:

    1. Oana-Valentina Cercelaru, 2016. "Unconditional Basic Income – Impact On The Economy," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 118-122, June.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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