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Basic income and unemployment in a unionized economy

  • Van der Linden, Bruno

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))

This paper develops a dynamic general equilibrium model of a unionized economy to analyze the impact of unconditional basic income schemes on unemployment. Starting from a given level of the unemployment benefits, two reforms are envisaged : one where these benefits are replaced by a higher unconditional grant (the full basic income) and another where the income of the unemployed remains unchanged (the partial basic income). Assuming a proportional tax on earnings and a balanced budget of the State, it is shown that the equilibrium unemployment rate decreases if a partial basic income is implemented. The same conclusion holds for a sufficiently small full basic income.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1997014.

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Length: 25
Date of creation: 01 Jul 1997
Date of revision: 10 Jul 1997
Handle: RePEc:ctl:louvir:1997014
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  1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, July.
  2. Richard Layard & Stephen Nickell, 1990. "Is Unemployment Lower if Unions Bargain over Employment?," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 773-787.
  3. Huizinga, F & Schiantarelli, Fabio, 1992. "Dynamics and Asymmetric Adjustment in Insider-Outsider Models," Economic Journal, Royal Economic Society, vol. 102(415), pages 1451-66, November.
  4. Lockwood, Ben & Manning, Alan, 1993. "Wage setting and the tax system theory and evidence for the United Kingdom," Journal of Public Economics, Elsevier, vol. 52(1), pages 1-29, August.
  5. Dor, Eric & Van der Linden, Bruno & Lopez-Novella, Maritza, 1997. "On Labour Market Policies and Aggregate Unemployment Outflows," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(1), pages 109-31, February.
  6. James Meade., . "Agathotopia," Hume Papers 16, David Hume Institute.
  7. Bowles, Samuel, 1992. "Is income security possible in a capitalist economy? : An agency-theoretic analysis of an unconditional income grant," European Journal of Political Economy, Elsevier, vol. 8(4), pages 557-578, December.
  8. Manning, Alan, 1993. "Wage Bargaining and the Phillips Curve: The Identification and Specification of Aggregate Wage Equations," Economic Journal, Royal Economic Society, vol. 103(416), pages 98-118, January.
  9. Burda, Michael C & Wyplosz, Charles, 1993. "Gross Worker and Job Flows in Europe," CEPR Discussion Papers 868, C.E.P.R. Discussion Papers.
  10. KÉSENNE, Stefan, 1993. "The unemployment impact of a basic income," SESO Working Papers 1993012, University of Antwerp, Faculty of Applied Economics.
  11. repec:ant:wpaper:1993012 is not listed on IDEAS
  12. Manning, Alan, 1991. "The Determinants of Wage Pressure: Some Implications of a Dynamic Model," Economica, London School of Economics and Political Science, vol. 58(231), pages 325-39, August.
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