The Establishment of Global Universal Basic Income
Hoynes, Hilary, and Jesse Rothstein. “Universal basic income in the United States and advanced countries.” Annual Review of Economics 11 (2019): 929-958.
Hoynes et al. discussed how much Universal Basic income could help improve the general quality of life and economic growth in developed countries. They termed Universal basic income as a concept that is gaining popularity among scholars in developed countries. The researchers outlined the three problems that Universal basic income is meant to resolve: providing adequate finances to the individuals and households to meet their basic needs in the absence of other income sources.
They also wanted to explore a common notion among scholars that the Universal Basic income tends to phase out as the general income level rises. Lastly, a large proportion of the population has substantial financial need and limited streams of income like single parents.
For accuracy in the qualitative analysis, the researchers used the United States case, which presented a problem because it has relatively low-income transfer and focuses on work. They found out that a true Universal Basic Income would be hard to achieve due to its immense expense. However, some other basic income forms would better suit the United States, like Medicaid, Medicare, and Social security.
The researcher focused on the incentive effect of Universal Basic Income and the right transfer framework to be adapted. That also assesses the incentives surrounding the accumulation of human capital, the cultivation of entrepreneurial culture, and the economy’s labor supply. This is because the greatest motivation for supplying labor and working hard to grow the economy is that the individual and households can earn a living. However, it will reduce the stigma against the poor and help improve the general quality of living.
Banerjee, Abhijit, Paul Niehaus, and Tavneet Suri. “Universal basic income in the developing world.” Annual Review of Economics (2019).
Banerjee et al. assessed whether developing countries should have adequate income to distribute to its citizenry in Universal basic income. This was due to the immense popularity of Universal Basic income over the past few years. They also assessed the impact of such a program on the economy of a developing country. It is a common notion that the government should tax the rich and distribute the proceeds among the poor with an argument that the wealthy use society’s resources to create their fortune. They also addressed the fact that Universal Basic Income is expected to interfere with people’s motivation to partake in income-generating activities that are not cost-effective.
The researcher pointed out a Universal Basic Income program unaffordable to governments in developing countries. However, there are more preferable options, for example, targeted basic income that focuses on helping those who need financial aid the most. For example, older adults, people with disability, and people with disabilities and their success depend on targeting effectiveness. Governments’ resources should, however, go to the provision of amenities and development programs. They also projected that the middle and high-income earners would not accept paying more taxed to fund the Universal Basic income.
Banerjee et al. outlined the merits of Universal Basic Income, stating that targeted basic income transfer could lead to great controversy on the criteria of selecting beneficiaries. Universal basic income would therefore provide a basis for social cohesion among the citizenly of a country. They stated that Universal Basic Income was different in developing countries as in developed countries since the developed nations had more resources to distribute among their people.
However, technological development advancement leading to automation affected labor demand in both developing and developed countries. Developing countries should instead invest in development projects rather than invest a significant proportion of their revenue in recurring expenditure.