Author:
Juan Carlos Conesa[1] , Bo Li[2] , and Qian Li[3],[4]
[1]Department of Economics, Stony Brook University
[2]School of Economics, Peking University
[3]Institute for Advanced Research, Shanghai University of Finance and Economics
[4]Key Laboratory for Mathematical Economics (SUFE), Ministry of Education, China
Abstract
We provide a comprehensive quantitative evaluation of Universal Basic Income (UBI), eval
uating different degrees of generosity and the fiscal alternatives to finance it. Replacing existing
targeted transfers with a UBI of equal fiscal cost results in widespred welfare losses. In contrast,
a combination of generous UBI (at least $15,000 per household) with a switch to progressive
consumption taxation could be beneficial from the perspective of ex-ante expected welfare in
the long run. However, the quantitative analysis of the transitional dynamics reveals non-trivial
transitional costs for most current households.
Keywords: Incomplete market, Heterogeneous agents, Consumption tax, Universal basic in
come, Transitional dynamics
JEL classification: E2 , D52, H21
Download:
Universal Basic Income and Progressive Consumption Taxes.pdf
