by Kate McFarland | Mar 31, 2017 | Research
Luke Martinelli, Research Associate at the University of Bath’s Institute for Policy Research (IPR), has prepared a new working paper that uses simulation techniques to analyze the effects of four different revenue-neutral basic income schemes. Martinelli’s analysis suggests that the design of a basic income falls prey to the “iron triangle of welfare reform” — wherein it is impossible simultaneously to meet the goals of keeping the program at a reasonable cost, meeting the needs of beneficiaries, and maintaining work incentives (see pp. 6, 44-46).
The paper was published as part of the IPR’s ongoing project Examining the Case for a Basic Income, which also includes a series of lectures, workshops, and other events.
Abstract:
In line with a dramatic resurgence of interest in basic income in recent years, there have been a number of studies analysing the fiscal and distributional consequences of specific basic income schemes. These ‘microsimulation’ studies use representative household surveys to examine the effects of hypothetical reforms at the national level and for specific demographics.
We make several original contributions to this burgeoning literature, modelling a number of original basic income schemes. These include a wide variety of schemes with full coverage and a number of schemes with partial coverage. We also carry out a detailed analysis of four revenue-neutral full schemes.
- Among systems with ‘full’ coverage, we have modelled four levels of generosity, and four types of compensatory tax and benefit reform for each.
- For the partial coverage schemes, we model how expansion of coverage could be sequenced in order to distribute the fiscal burden over a longer period of time.
- The revenue-neutral schemes assume that increases in expenditure must be broadly matched by increases in tax revenue. We suggest that besides the elimination of the personal income tax allowance and national insurance lower and upper thresholds, the income tax rate would have to increase by 4% (for a basic income set at the standard level of existing benefits) and 8% (for one with premiums for individuals determined as disabled) to pay for our schemes.
For each scheme, we discuss the fiscal implications and the implications for levels of poverty and inequality. For the revenue neutral schemes, we provide a more detailed breakdown of distributional effects, disaggregating changes in household income levels by income quintile, family type, number of children, and labour market status. The main argument of the paper is that we are faced with a series of trade-offs with respect to policy design, between the goals of meeting need / alleviating poverty, controlling cost, and eliminating means-testing. Our schemes aims to replace a large range of existing benefits with a basic income. The unavoidable reality is that such schemes either have unacceptable distributional consequences or they simply cost too much. The alternative – to retain the existing structure of means-tested benefits – ensures a more favourable compromise between the goals of meeting need and controlling cost, but does so at the cost of administrative complexity and adverse work incentive effects.
Paper
Luke Martinelli, “The Fiscal and Distributional Implications of Alternative Universal Basic Income Schemes in the UK,” Institute for Policy Research, March 2017.
Photo: “lots of iron triangles” CC BY-NC-ND 2.0 danna § curious tangles
by Kate McFarland | Mar 23, 2017 | Research
Three University of Manitoba economists, Wayne Simpson, Greg Mason, and Ryan Godwin, have jointly authored a new research paper about the Manitoba Basic Annual Income Experiment (“Mincome”), a trial of a guaranteed income that took place from 1974 to 1979.
The Mincome experiment consisted of randomized studies in Winnipeg and rural Manitoba, as well as a saturation study in the town of Dauphin, where all residents were eligible for participation in the study. Participants received an income supplement that was phased out as personal earnings increased, and several combinations of minimum income level and taxation rates were tested. The guaranteed income scheme tested, a negative income tax, is equivalent in its distributional effects to a basic income that is taxed back with personal income over a certain amount. Decades after Mincome ended, its outcomes were analyzed by economist Evelyn Forget. The results are now frequently mentioned as evidence of the effectiveness of basic income / negative income tax.
At present, the province of Ontario is preparing a new major trial of a guaranteed income (which, as in Mincome, is likely to be designed as a negative income tax). In a lengthy discussion paper about the new trial, project advisor Hugh Segal notes that the Dauphin saturation study, showed “population health improvements, the potential for government health savings, and no meaningful reduction in labour force participation.”
In their new article, Simpson, Mason, and Godwin re-examine Mincome, and consider how it might answer questions about contemporary experiments in Ontario and elsewhere.
Abstract
The recent announcements of the Ontario Basic Income Pilot and Finland’s cash grants to jobless persons reflect the growing interest in some form of guaranteed annual income (GAI). This idea has circulated for decades and has now been revived, no doubt prompted by concerns of increased inequality and employment disruptions. The Manitoba Basic Annual Income Experiment (Mincome), conducted some 40 years ago, was an ambitious social experiment designed to assess a range of behavioural responses to a negative income tax, a specific form of GAI. This article reviews that experiment, clarifying what exactly Mincome did and did not learn about how individuals and households reacted to the income guarantees. This article reviews the potential for Mincome to answer questions about modern-day income experiments and describes how researchers may access these valuable data.
Wayne Simpson, Greg Mason and Ryan Godwin (2017), “The Manitoba Basic Annual Income Experiment: Lessons Learned 40 Years Later,” Canadian Public Policy.
Reviewed by Cameron McLeod
Photo: Northern Lights in Manitoba, CC BY-NC-ND 2.0 AJ Batac
by Kate McFarland | Mar 15, 2017 | Research
Labor policy researcher Anne Gray has written a new research article, “Behavioural Effects of a Citizen’s Income on wages, job security and labour supply,” for the Citizen’s Income Trust (BIEN’s UK affiliate).
Gray begins her article by noting two predictions about the labor supply effect of basic income that appear in tension with one another: the first is that a basic income would increase the labor supply by removing the poverty trap (unemployed individuals could take jobs without the elimination of their benefits); the second is that a basic income would decrease the labor supply by allowing individuals to quit jobs to (for example) perform unpaid labor, retrain, or take more time to find a suitable job. She examines both of these hypothesizes in some detail, stressing that a basic income could result in employers’ reducing wages if the labor supply increases.
Gray then proceeds to “guestimate” the effect of a basic income on workforce participation for various groups (differing according to employment status, socioeconomic status, and household status, for example). She concludes that labor supply would indeed increase among low-wage workers. Thus, a minimum wage would be necessary to enforce in addition to a basic income, in order to prevent the basic income from becoming an employer’s supplement to low wages.
Reviewed by Dave Clegg
Photo: CC BY 2.0 Stephen Bowler
by Kate McFarland | Mar 11, 2017 | Research
Daiga KamerÄde (Senior Lecturer in Quantitative Research Methods at the University of Salford) and Matthew R. Bennett (Lecturer in Social Policy at the University of Birmingham) have written a paper for the journal Work, Employment and Society in which they examine changes in the structure of the labor market and their impact on mental health and well-being. Indeed, it is known that there is a link between these two areas, which is why many will use private label capsules of CBD oils to help manage their own mental health, but a formal study is still important.
KamerÄde and Bennett use data from the European Quality of Life Survey to analyze differences in mental health status between unemployed individuals in different nations, as well as between those who engaged in volunteer work and those who did not. (The dataset consisted of 2,440 individuals, all unemployed, from 29 European countries.) While it is known that unemployment is associated with lower mental health, KamerÄde and Bennett investigate whether receipt of government support and participation in voluntary work can improve mental health and well-being. This can lead to other opportunities if seen as viable, such as gaining an online yoga certification yoga alliance qualification to those who want to contribute to ongoing mental wellness and health systems.
One of their most important findings is that, in countries with less generous unemployment benefits, volunteer work is associated with worse mental health outcomes — even though volunteer work shows beneficial effects on mental health in countries with more generous benefits. Based on this result, the authors conclude that “financial support for the unemployed” – possibly through (as they mention) a guaranteed basic income or citizen’s income scheme – “should occupy a central position in theoretical perspectives focusing on reducing the negative effects of unemployment”:
Unemployment could lead to negative psychological and physiological health effects such as depression, lower self-esteem, eating disorders, cardiovascular diseases, etc. Aged care courses Melbourne, or similar accreditations could, therefore, prove beneficial to the unemployed youths. This would help benefit the people in terms of their mental health, and in turn, they could also be of service to the government and society by their volunteering work. Financial and psychological support in trying times can be of tremendous comfort to the people who are signing up for voluntary services.
The findings indicate that financial support during periods of unemployment remains crucial for well-being and mental health. Although individuals can boost one dimension of their own well-being (feeling that their life is worthwhile) by exercising their agency through engaging in work that is an alternative to paid work, such engagement without any financial support can also damage their mental health. These findings suggest that financial support for the unemployed – through unemployment benefits, guaranteed basic income (Gorz, 1989), citizens income (Standing, 2011), etc. – should occupy a central position in theoretical perspectives focusing on reducing the negative effects of unemployment.
Full article available at the following link:
Daiga Kamerade-Hanta and Matthew R. Bennett (December 2016) “Rewarding work: cross-national differences in benefits, volunteering during unemployment, well-being and mental health,” Work, Employment and Society.
Reviewed by Genevieve Shanahan
Photo: CC BY 2.0 Virginia State Parks
by Kate McFarland | Mar 7, 2017 | Research
The German political foundation Friedrich-Ebert-Stiftung (FES) has released a short report on digitalization in the UK and its consequences for public policy [1].
The report notes that, to this point, education and skills-training have been the central strategies to confront the effect of automation on the labor market. It concludes, however, by suggesting that it will be necessary to investigate basic income as a long-term solution:
“Education policy represents at best only a medium term solution to the problems arising from transformation. Over the long term other, much broader structural changes will have to be discussed, which will also seek to detach work from social security coverage. Whether, for example, the often mentioned unconditional basic income – above the subsistence level – could be a sustainable solution here must be subject to more detailed empirical research.”
The report was published as part of FES’s “Politics for Europe” project, which promotes the development of strong social democratic institutions in Europe. In general, basic income has not been a focus point of FES’s publications in the series. For example, a longer report on digitalization in Europe does not suggest universal basic income as a solution to the challenges presented by the changing nature of work.
[1] Markus Trämer and Rolf Frankenberger, “On the Way to Welfare 4.0 – Digitalisation in the United Kingdom,” Friedrich-Ebert-Stiftung, 2017.
[2] Daniel Buhr, Claudia Christ, Rolf Frankenberger, Marie-Christine Fregin, Josef Schmid and Markus Trämer, “On the Way to Welfare 4.0? Digitalisation of the Welfare State in Labour Market, Health Care and Innovation Policy: A European Comparison,” Friedrich-Ebert-Stiftung, 2017.
Reviewed by Cameron McLeod
Photo CC BY 2.0 tico_24
by Genevieve Shanahan | Mar 6, 2017 | Research
Patricia Schulz, a Swiss lawyer and specialist in international human rights and gender equality, offers a short paper advocating for basic income from a feminist and gender equality perspective in the peer-reviewed journal Global Social Policy.
In this article, Schulz argues that strong arguments for basic income “based on social justice, equality, dignity, freedom from want” could be bolstered by more systematic arguments from a gender perspective.
A central point made in this article is that existing social security systems are tied to long-term remunerated work, disproportionately beyond the reach of women:
“as most social security systems are (still) based on contributions linked to remunerated work, independent or salaried, the inferior income of women, their restriction to part-time jobs as well as the interruptions in their careers due to care responsibilities will directly impact the level of social protection they can expect in case of old age, disability, illness and so on, as well as expose them to depend on a partner and/or the (welfare) state.”
Schulz is an expert with the United Nations Committee on the Elimination of Discrimination Against Women (CEDAW), a member of the Board of the United Nations Research Institute for Social Development (UNRISD), and was the director of the Swiss Federal Office for Gender Equality (FOGE) for six years until 2010.
Patricia Schulz, “Universal basic income in a feminist perspective and gender analysis,” Global Social Policy Forum, January 31, 2017.
Reviewed by Cameron McLeod
Photo: Patricia Schulz, member of the Committee on the Elimination of Discrimination against Women addresses during the 5th Edition of Ciné ONU, Palais des Nations. Friday 6 March 2015, CC BY-NC-ND 2.0 UN Geneva
