Universal Basic Income: A Dynamic Assessment

64 Pages Posted: 15 Jun 2020 Last revised: 27 Mar 2021

See all articles by Diego Daruich

Diego Daruich

New York University (NYU) - Department of Economics

Raquel Fernández

New York University - Leonard N. Stern School of Business, Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: June 2020

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.

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Suggested Citation

Daruich, Diego and Fernández, Raquel, Universal Basic Income: A Dynamic Assessment (June 2020). NBER Working Paper No. w27351, Available at SSRN: https://ssrn.com/abstract=3626852

Diego Daruich (Contact Author)

New York University (NYU) - Department of Economics ( email )

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New York, NY 10011
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Raquel Fernández

New York University - Leonard N. Stern School of Business, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-8908 (Phone)
212-995-4186 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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