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Universal Basic Income: A Dynamic Assessment

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  • Diego Daruich
  • Raquel Fernández

Abstract

Universal basic income (UBI) is an increasingly popular policy proposal but there is no evidence regarding its longer-term consequences. We study UBI in a general equilibrium model with imperfect capital markets, labor market shocks, and intergenerational linkages via skill formation and transfers. We find that UBI increases-welfare for older agents but has large-welfare losses for younger agents and future generations. A sizable share of the negative effects stem from the endogenous intergenerational linkages. Modeling automation as an increased probability of an “out-of-work” shock, the model provides insights on the changing welfare consequence of UBI in a riskier environment.

Suggested Citation

  • Diego Daruich & Raquel Fernández, 2020. "Universal Basic Income: A Dynamic Assessment," NBER Working Papers 27351, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27351
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    1. Universal Basic Income: A Dynamic Assessment
      by Christian Zimmermann in NEP-DGE blog on 2021-06-27 05:10:37

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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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