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2005-09-26

What happens after a basic income is introduced? 


I have spent a frustrating time on the net trying to better understand basic income/minimum income models. There are many different models of a basic income guarantee (a summary in six illustrative graphs including the one shown to the right is here [.pdf]). Most of them stipulate a cash handout to people below a certain income threshold, and usually the cash-handout is not means-tested. In other words, everybody living in a certain community should be guaranteed a tolerable minimum of material standards. Annoyingly, the corresponding websites tend to be big in vision but small in analysis of economic consequences.

Here I do not want to get into the sprawling debate about why such models would or wouldn't be a good thing as a radical reform project of social policy, although I point you to the longish and favourable review in German that triggered my curiosity. Lohn der Angst [DE] by Wolf Lotter appeared in German new-economy magazine brand eins in July 2005.

My appeal to readers - and reminder to myself - is this: are there any online documents that answer the following questions:
  1. What percentage of jobs, full- and part-time, in a developed economy of 2005 would disappear if a basic income equivalent to the poverty threshold (60% of median income) was introduced, assuming beneficiaries could not earn extra without losing corresponding amounts of the basic income? Clearly few people would take up (part-time) jobs below the basic income level any longer, and not all such jobs would still be productive for the employer at a higher wage. So a certain number of jobs would be lost, but would they be few enough for tax revenues to remain solid?
  2. What percentage of GDP would these lost jobs represent?
  3. In order to avoid these job losses, one could allow people to earn extra on top of the basic income subsidy, which leads to models of a negative income tax. The problem here seems to be that employers could then lower the wages and absorb a public subsidy that is originally designed to help the poor. How could this be avoided? (Minimum wages may be part of the answer.)
  4. How can it be avoided that if such a basic income system covers all residents in a certain place, it will force governments to severely limit immigration, because otherwise poor people from countries with low incomes or high unemployment would flood the place?

I would like to support basic income models for many reasons, but I need answers to these doubts.


1 comments:

I have some friends in Oxford who can easily access their libraries/lecturers and if you wish I could drop them a line.
 
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