Basic income: Arguments, evidence, prospects

14-09-2016

Automation, digital revolution, globalisation and the ongoing economic crisis have led to higher unemployment, more job insecurity and weakened social standards in many countries. In order to cope with increased inequality and poverty, the topic of (unconditional) basic income has been attracting attention in Europe. In a recent representative poll, 64% were in favour of a basic income. Proponents of basic income argue, not least, that it would have positive effects on education and job selection criteria as it promotes individual freedom, emancipation for women, (social) justice and poverty reduction. Basic income could help in redistributing the benefits from automation and digitalisation. As the concept of basic income is simple and transparent, it could replace the complex welfare system. Critics of (unconditional) basic income say the concept is too expensive to implement and that its financing would require higher taxes. Higher taxes and consumer prices would in turn harm the poor. Furthermore, unconditional basic income could reduce the willingness of people to work and attract undesired immigration. There seems to be a gradual trend away from unemployment insurance to income insurance. EU Member States such as the Netherlands and Finland have announced that they are testing basic income at micro level starting in 2017. Studies on micro-experiments have mainly confirmed the positive effects of (unconditional) basic income on reducing poverty and inequality, but questions on how to finance and implement basic income on the macro level remain.

Automation, digital revolution, globalisation and the ongoing economic crisis have led to higher unemployment, more job insecurity and weakened social standards in many countries. In order to cope with increased inequality and poverty, the topic of (unconditional) basic income has been attracting attention in Europe. In a recent representative poll, 64% were in favour of a basic income. Proponents of basic income argue, not least, that it would have positive effects on education and job selection criteria as it promotes individual freedom, emancipation for women, (social) justice and poverty reduction. Basic income could help in redistributing the benefits from automation and digitalisation. As the concept of basic income is simple and transparent, it could replace the complex welfare system. Critics of (unconditional) basic income say the concept is too expensive to implement and that its financing would require higher taxes. Higher taxes and consumer prices would in turn harm the poor. Furthermore, unconditional basic income could reduce the willingness of people to work and attract undesired immigration. There seems to be a gradual trend away from unemployment insurance to income insurance. EU Member States such as the Netherlands and Finland have announced that they are testing basic income at micro level starting in 2017. Studies on micro-experiments have mainly confirmed the positive effects of (unconditional) basic income on reducing poverty and inequality, but questions on how to finance and implement basic income on the macro level remain.