This is entirely not obvious to me, given that the motivation to go get a job will be less.
Not sure what you mean. If you can have a paying job and some of your ‘welfare’ on top of it, the incentive is obviously greater than if getting a paying job meant giving up all welfare. This matters, especially for low-paying jobs which are the kinds welfare recipients are most likely to get.
If you can have a paying job and some of your ‘welfare’ on top of it, the incentive is obviously greater than if getting a paying job meant giving up all welfare.
Not at all. If the UBI is meaningfully large (there is really no point in something like $100/month), you would be able to live on it. If you can live on UBI, the incentive to find a job is less because the alternatives are MUCH more pleasant.
The carrot is slightly larger, but the stick becomes almost non-existent.
Are you comparing UBI recipients to people who get no subsidy/welfare at all? I’m not sure that’s a meaningful comparison. And one can structure the UBI amount such that utility of income is still steeply increasing at the margin—or, phrased differently, such that folks will most likely want to supplement their UBI by doing some work on the side. It’s a lot harder to do that if the premise is that you’re “looking for work at this time” but not actually getting market income.
Are you comparing UBI recipients to people who get no subsidy/welfare at all? I’m not sure that’s a meaningful comparison.
UBI recipients, by the virtue of that “U”, are also known as “the entire population”. I am a bit confused which “comparing” are you talking about.
one can structure UBI such that utility of income is still steeply increasing at the margin
Can you demonstrate? If you increase the marginal utility of earned income at some level, you will by the same token decrease that marginal utility at some different level. Unless you want UBI to monotonously increase with the amount earned, of course...
people will want to supplement their UBI by doing some work
Humans are satisficers. If UBI is sufficient to pay for a room, an internet connection, and enough pizzas, why should I work? Work takes an awful lot of time, is often unpleasant, the bosses are not the nicest people, etc. Much easier to spend time in front of a screen or hanging out with your friends.
And by the time your low-motivation teenager figures out that money is useful and that advancing in life could be worthwhile, he is in his late 20s and basically unemployable—not only because of lack of skills, but also because of lack of work ethic.
I’m not talking about phaseouts or things like that, I’m just saying that the UBI amount can be set at a level where looking for some work on the side has a high utility at the margin.
Humans are satisficers. If UBI is sufficient to pay for a room, an internet connection, and enough pizzas, why should I work? Work takes an awful lot of time, is often unpleasant, the bosses are not the nicest people, etc.
Well, by working, you can pay for a nicer room, a faster connection, and better pizza toppings. Yes, many jobs are unpleasant, but some are not. Especially as the UBI would make things like minimum wages obsolete, so folks would be free to seek better work conditions in exchange for some combination of higher skills and giving up some pay.
There are factors pointing both ways here. If getting a job means giving up benefits for the unemployed, or means-tested welfare that you’ll become ineligible for, that’s a disincentive to get a job. But utility isn’t linear in money, and so a job paying N dollars will always be more attractive to someone making zero dollars than the same job is to someone on UBI worth K dollars—and increasingly so the higher K is. That’s also a disincentive.
Which of these disincentives is bigger depends on the sizes of N and K and the specifics of the welfare system. I think I’d usually expect the incentive landscape on the margins to be friendlier under UBI, but it’s by no means a certainty.
Not sure what you mean. If you can have a paying job and some of your ‘welfare’ on top of it, the incentive is obviously greater than if getting a paying job meant giving up all welfare. This matters, especially for low-paying jobs which are the kinds welfare recipients are most likely to get.
Not at all. If the UBI is meaningfully large (there is really no point in something like $100/month), you would be able to live on it. If you can live on UBI, the incentive to find a job is less because the alternatives are MUCH more pleasant.
The carrot is slightly larger, but the stick becomes almost non-existent.
Are you comparing UBI recipients to people who get no subsidy/welfare at all? I’m not sure that’s a meaningful comparison. And one can structure the UBI amount such that utility of income is still steeply increasing at the margin—or, phrased differently, such that folks will most likely want to supplement their UBI by doing some work on the side. It’s a lot harder to do that if the premise is that you’re “looking for work at this time” but not actually getting market income.
UBI recipients, by the virtue of that “U”, are also known as “the entire population”. I am a bit confused which “comparing” are you talking about.
Can you demonstrate? If you increase the marginal utility of earned income at some level, you will by the same token decrease that marginal utility at some different level. Unless you want UBI to monotonously increase with the amount earned, of course...
Humans are satisficers. If UBI is sufficient to pay for a room, an internet connection, and enough pizzas, why should I work? Work takes an awful lot of time, is often unpleasant, the bosses are not the nicest people, etc. Much easier to spend time in front of a screen or hanging out with your friends.
And by the time your low-motivation teenager figures out that money is useful and that advancing in life could be worthwhile, he is in his late 20s and basically unemployable—not only because of lack of skills, but also because of lack of work ethic.
I’m not talking about phaseouts or things like that, I’m just saying that the UBI amount can be set at a level where looking for some work on the side has a high utility at the margin.
Well, by working, you can pay for a nicer room, a faster connection, and better pizza toppings. Yes, many jobs are unpleasant, but some are not. Especially as the UBI would make things like minimum wages obsolete, so folks would be free to seek better work conditions in exchange for some combination of higher skills and giving up some pay.
There are factors pointing both ways here. If getting a job means giving up benefits for the unemployed, or means-tested welfare that you’ll become ineligible for, that’s a disincentive to get a job. But utility isn’t linear in money, and so a job paying N dollars will always be more attractive to someone making zero dollars than the same job is to someone on UBI worth K dollars—and increasingly so the higher K is. That’s also a disincentive.
Which of these disincentives is bigger depends on the sizes of N and K and the specifics of the welfare system. I think I’d usually expect the incentive landscape on the margins to be friendlier under UBI, but it’s by no means a certainty.