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An Examination of Financial Feasiblity and Redistributive Effect of Universal Basic Income

  • Korea Social Policy Review
  • Abbr : KSPR
  • 2018, 25(3), pp.3-35
  • DOI : 10.17000/kspr.25.3.201809.3
  • Publisher : Korean Association of Social Policy
  • Research Area : Social Science > Sociology > Medical / Welfare / Social policy
  • Published : September 30, 2018

Jong-Sung You 1

1가천대학교

Accredited

ABSTRACT

This article critically reviews the arguments that deny the financial feasbility and effectiveness of universal basic income as an alternative to existing social security systems and makes some suggestions to design effective and efficient basic income schemes. Regarding the financial feasibility of universal basic income, I argue that replacement of the existing regressive tax expenditures with universal basic income without raising tax rates can effectively reduce tax burden or provide income support to a majority of people except the rich. Addition of basic income to the tax base and reduction of the number of beneficiaries of public assistance and the amount of cash payment for them can further help save money. Regarding the redistributive effect, I note that the targeting ability of the existing social security systems is not good and that “the paradox of redistribution” that universal-type programs tend to be more redistributive than selective programs applies to universal basic income as well. I demonstrate significant redistributive effect of a hypothetical revenue-neutral basic income scheme and reviews several empirical studies done in Korea and abroad to show that basic income can be more effective in redistribution than social insurances or public assistance programs. Lastly, I emphasize the need to construct a reliable tax-benefit microsimulation model to help researchers to study redistributive effects of basic income schemes and other taxes and social policies.

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