Sunday, June 28, 2015

universal basic income

Yay, Utrecht is going to experiment with a universal basic income scheme. That is, a stipend regardless of other income. And they seem to be doing it in collaboration with economists, although the article is extremely thin on details.

Unfortunately, the coverage omits the number one reason to try such a scheme: it's a social safety net that doesn't result in exorbitant implicit marginal tax rates! That is, it doesn't discourage you from working due to the fear of losing your benefits. This is a very real, very big problem with social safety nets as currently ubiquitously implemented. Even >100% marginal tax rates occur, and it doesn't have to get nearly that high to have a big impact on work choices.

3 comments:

Justin Guinn said...

What's that you say Victor, "control group"? I think I might feint.

Bo Zimmerman said...

"it doesn't discourage you from working due to the fear of losing your benefits" -- but doesn't it discourage you from working due to the dis-utility of labor?

Vera L. te Velde said...

That particular discouragement is unavoidable :)