Unconditional Basic Income: Who Gets It? Who Pays for It? A Social Accounting Approach to Distribution

Abstract

Unconditional basic income is not a new topic in political economy, and it gains new momentum as more and more research is being devoted to it. The discussion focuses on the adequacy and effects such a policy measure may entail for a person and his socio-economic situation, usually. Object of investigation is the individual, and the corresponding theory is of micro-economic descent. In this paper, in contrast, we develop a method of how to assess feasibility and consequences of an unconditional basic income for a modern, open economy, on the macroeconomic level, using concepts and statistics of a Social Accounting Matrix (SAM) as our main tool. A SAM-based approach can measure, and perhaps model, the impact on the economic activity of a country, and on its economic institutions of new policy measures such as introducing an unconditional basic income.

The economic activity of a country is expressed in monetary flows as registered in the National Accounts. So their underlying principles and definitions are adopted. However, the habitual way of putting an economy into a sequence of institutional accounts connecting each institution’s income to the cost, - similar to business accounting - reveals only one, namely the inner-institutional half of the economic circuit. The other, outer half, namely, how the costs of one institution generate income for another one is better captured by the format of a Social Accounting Matrix. In the paper, the impact of an unconditional basic income is quantified, for macroeconomic aggregates of institutional sectors and socio-economic groups of households, taking the German and the Portuguese economies as examples. Purpose of the paper is not to argue for, or against, an unconditional basic income, but to offer a scientific tool with which to calculate and assess possibilities and consequences of the proposal, for a national economy as a whole.

Keywords: Social Accounting Matrix, Unconditional Basic Income, Income Distribution

JEL Classification: E01, E02, E16, E64