UBI or the minimum wage?
leave their jobs to return to education or find a new career will have been discontented with their jobs anyway. The duty of a government to maximize the quality of life of its people is not just economic, and by allowing people to find jobs that they prefer a UBI would be improving the quality of life of those people. Furthermore, workers will also be more efficient and productive in jobs which they enjoy, so this effect would actually boost the economy in the long run. Finally, the decreased wage workers receive will not negatively impact their livelihood, as the UBI payments will be supplementing this wage and likely leaving the workers better off than before (Hoynes and Rothstein, 2019). Longer term, however, most economists predict that wages will rise. Firstly, as mentioned earlier, the labour supply curve shifting in will increase the wage rate. Secondly, by allowing people to return to education a UBI would lead to increased investments into human capital (education of workers), meaning a larger portion of the workforce would be higher skilled and so would earn more. Wages for workers that remain low-skilled would probably stay below the old minimum wage, but due to the UBI the overall welfare of these workers would still likely increase (Hoynes and Rothstein, 2019). Workers will also be able to unionize over time and, since they are no longer reliant on their jobs for survival, they will have more bargaining power not to accept low wages or poor working conditions (Krämer, 2020). Output from the economy would also likely improve in the long term as higher-trained workers have been proven to work longer hours and be more efficient (Hoynes and Rothstein, 2019). A UBI’s impact on employment levels, however, is much harder to predict. Many argue that since people do not have to work to survive, the UBI would discourage participation in the labour force. However, people also claim that a UBI would encourage entrepreneurship, causing a shift out in demand for labour, increasing both wages and the quantity of labour consumed. The same third-party analysis of the data gathered by Dr Costello mentioned earlier found that the payments caused no change in work force participation among fathers, and even found that they increased participation amongst mothers (Akee et al, 2010). Since only a small portion of the community were receiving these payments, this does not help us to determine the effects a UBI would have on demand for labour, but it does tell us that supply would probably not decrease. The review also found that the children of families who received the payments averaged 1.1 years more in education by the time they were 21 than those who did not receive the payments, confirming the theory that a UBI would lead to a more skilled work force. Another natural experiment for a UBI is the Alaska Permanent Fund. Since 1982, all residents of Alaska have received an annual cash transfer from the Alaska Permanent Fund, generated through the sale of the state’s oil. The payments are usually smaller than the ones Cherokee’s receive, ge nerally falling between $1000 and $2000, but still provide a good case study for the effects of universal payments. When a study compared labour force participation in Alaska before and after these payments to a synthetic control group of 6 other similar states, it found that the difference was negligible. The same study even found that whilst there was no decrease in full time work, there was a 17% increase in part time work, suggesting a UBI could actually boost labour force participation (Jones and Marinescu, 2020).
In conclusion, while the theory is inconclusive, empirical evidence suggests that a UBI has no negative impact on employment levels in an economy and may even increase them. While there is no empirical
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