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A basic income policy for Peru: can it work?

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  • María Amparo Cruz-Saco

Abstract

This article assesses the pros and cons of a basic income grant and estimates the financial cost of paying a similar benefit to very specific groups in Peru. This is an old concept in the economic literature and is associated with a “negative income tax”. A universal basic income grant can be an adequate instrument to smooth consumption and distribute some purchasing power to the poor. The shift in effective demand after paying a basic income can have important multiplier effects on small local markets and on the creation of work opportunities. The exercise suggests that the implementation of such instrument should be gradual and accompanied by a substantial increase in general government revenues. Since a basic income policy can have a non-trivial positive impact in the reduction of poverty and in increasing both equity and social cohesion, its appropriateness should be given enough thought.

Suggested Citation

  • María Amparo Cruz-Saco, 2002. "A basic income policy for Peru: can it work?," Apuntes. Revista de ciencias sociales, Fondo Editorial, Universidad del Pacífico, vol. 29(51), pages 5-26.
  • Handle: RePEc:pai:apunup:es-51-01
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    File URL: http://revistas.up.edu.pe/index.php/apuntes/article/download/524/526
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    1. L. F. M. Groot & H. M. M. Peeters, 1997. "A Model of Conditional and Unconditional Social Security in an Efficiency Wage Economy: The Economic Sustainability of a Basic Income," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 19(4), pages 573-597, July.
    2. World Bank, 2002. "World Development Report 2002," World Bank Publications - Books, The World Bank Group, number 5984.
    3. William A. Jackson, 1999. "Basic Income and the Right to Work: A Keynesian Approach," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(4), pages 639-662, July.
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    1. Tercelli Ilaria, 2013. "The Most Effective Means of Social Protection? An Evaluation of the Impact of Conditional Cash Transfers on Schooling and Child Labour in Peru," Basic Income Studies, De Gruyter, vol. 8(2), pages 173-202, December.
    2. Jiaqi Yang & Geetha Mohan & Supriya Pipil & Kensuke Fukushi, 2021. "Review on basic income (BI): its theories and empirical cases," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(2), pages 203-239, December.

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