UK: Institute for Policy Research publishes “Exploring the Distributional and Work Incentive Effects of Plausible Illustrative Basic Income Schemes”
The Institute for Policy Research (IPR) at the University of Bath published its latest report on the effects of basic income — titled “Exploring the Distributional and Work Incentive Effects of Plausible Illustrative Basic Income Schemes” — on May 18, 2017.
Authored by IPR Research Associate Luke Martinelli, the report builds upon the working paper “The Fiscal and Distributional Implications of Alternative Universal Basic Income Schemes in the UK” (March 2017), in which Martinelli used simulation techniques to model four different types of basic income schemes (varying according to the amount of the benefit and accompanying changes in the tax and benefit system) and their effects on poverty and inequality.
The new report carries out a more detailed analysis of basic income schemes set at the three levels found to be most plausible in the earlier report: the level of the tax saving implied by the UK’s personal income tax allowance (which it would replace); the level of the UK’s existing social assistance benefits (many of which would be replaced); the level of existing benefits plus premiums for the disabled.
In this new contribution, Martinelli examines the predicted impact of these schemes on financial work incentives, including both financial incentives to work at all and incentives to increase work marginally. Martinelli looks in greater detail at the distributional consequences of the basic income schemes, including the effect on women and disabled individuals.
According to Martinelli, “Both of these elements are crucial to efforts to evaluate whether basic income has desirable effects and what types of design features would help make the policy politically feasible. The models we examine in this paper present a number of issues that basic income advocates will have to address as they think about implementation and policy design more closely.”
The report concludes that, with respect to distributional consequences, each scheme results in both winners and losers, stating, “Our core insight is that for the most part, even when particular groups gain (lose) on average, there are usually still non-trivial numbers of individuals and households who are worse off (better off).”
Concerning work incentives, each scheme sees a reduction in financial work incentives for most individuals. However, the distribution of effects was such that “we can imagine the effects of stronger work incentives on particularly sensitive groups to outweigh the more generalised effect of weaker work incentives over the wider population.”
Download the full report from IRP’s website:
“IPR Report: Exploring the Distributional and Work Incentive Effects of Plausible Illustrative Basic Income Schemes” (Institute for Policy Research, University of Bath).
Reviewed by Dawn Howard
Photo: “Rough sleeper” in Taunton, England; CC BY-NC-ND 2.0 Neil Moralee