Universal Basic Income: A Dynamic Assessment
64 Pages Posted: 15 Jun 2020 Last revised: 27 Mar 2022
Date Written: June 2020
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: Suggested Citation