Taxes would increase to pay for the Universal Basic Income. You could do it using the money we currently spend on welfare, but that includes things like medicare. Either we need to keep that, or we need to give them extra money to pay for medical insurance.
Supply of labor could decrease. This is a necessary consequence of any effort to help the poor. But since we already have a welfare system, it’s just a question of which causes labor to decrease less.
Supply of labor could decrease. This is a necessary consequence of any effort to help the poor. But since we already have a welfare system, it’s just a question of which causes labor to decrease less.
For things like welfare (and almost certainly for UBI, though I doubt there’s enough empirical evidence either way to be sure), yes.
Things like education subsides (assuming they subsidize professionally relevant education rather than just signaling, which admittedly is a somewhat dubious assumption) and the EITC (basically a negative income tax for the working poor in the US) could very well increase the labor supply.
basically a negative income tax for the working poor in the US
That would increase incentive to work for the poor, but decrease the incentive to work hard enough to stop being considered poor. They can’t have the income tax be negative for everyone.
The idea is that you’re taxed on the UBI, as well, so your tax rate remains flat (or flatter than the current system) regardless of your income.
The big divergence is with the way welfare works now, when, depending on state, every dollar you can make, on average, costs you $1.50 in benefits, up to ~$70,000 for a single mother. That is, working makes you actively worse off. (Google “Welfare Cliff” for more information on this phenomenon, if you’re interested.)
One of the big things which happened during Clinton’s administration was a systematic adjustment of welfare cut-off points to reduce the gradient of the various welfare cliffs; this resulted in a labor boom, which coincidentally coincided with the .dot boom. Over time inflation ate away at the gradients, and further adjustments raised the cliff face, and we’re now worse-off than before in that regard.
So you can very much have a system in which the government is providing more welfare and yet people have a stronger incentive to work. That just seems bizarre in our universe, where every increase in welfare actively -destroys- people’s incentive to work, since their receipt of welfare is more or less conditional on their not working.
Taxes would increase to pay for the Universal Basic Income. You could do it using the money we currently spend on welfare, but that includes things like medicare. Either we need to keep that, or we need to give them extra money to pay for medical insurance.
Supply of labor could decrease. This is a necessary consequence of any effort to help the poor. But since we already have a welfare system, it’s just a question of which causes labor to decrease less.
For things like welfare (and almost certainly for UBI, though I doubt there’s enough empirical evidence either way to be sure), yes.
Things like education subsides (assuming they subsidize professionally relevant education rather than just signaling, which admittedly is a somewhat dubious assumption) and the EITC (basically a negative income tax for the working poor in the US) could very well increase the labor supply.
That would increase incentive to work for the poor, but decrease the incentive to work hard enough to stop being considered poor. They can’t have the income tax be negative for everyone.
The idea is that you’re taxed on the UBI, as well, so your tax rate remains flat (or flatter than the current system) regardless of your income.
The big divergence is with the way welfare works now, when, depending on state, every dollar you can make, on average, costs you $1.50 in benefits, up to ~$70,000 for a single mother. That is, working makes you actively worse off. (Google “Welfare Cliff” for more information on this phenomenon, if you’re interested.)
One of the big things which happened during Clinton’s administration was a systematic adjustment of welfare cut-off points to reduce the gradient of the various welfare cliffs; this resulted in a labor boom, which coincidentally coincided with the .dot boom. Over time inflation ate away at the gradients, and further adjustments raised the cliff face, and we’re now worse-off than before in that regard.
So you can very much have a system in which the government is providing more welfare and yet people have a stronger incentive to work. That just seems bizarre in our universe, where every increase in welfare actively -destroys- people’s incentive to work, since their receipt of welfare is more or less conditional on their not working.