Not that basic: how level, design, and context matter for the redistributive outcomes of universal basic income

Proponents of a basic income (BI) claim that, on top of many other benefits, it could bring significant reductions in financial poverty. Using microsimulation analysis in a comparative two-country setting, we show that the potential poverty-reducing impact of BI strongly depends on exactly how and where it is implemented. Implementing a BI requires far more choices than advocates seem to realise. The level at which a BI is set matters, but its exact specification matters even more. The impact of a BI, be it a low or a high one, also strongly depends on the characteristics of the system that it is (partially) replacing or complementing, as well as the socio-economic context in which it is introduced. Some versions of BI could potentially help to reduce poverty but always at a significant cost and with substantial sections of the population incurring significant losses, which matters for political feasibility. A partial BI complementing existing provisions appears to make more potential sense than a full BI replacing them. The simplicity of BI, however, tends to be vastly overstated.

Automated summary

Proponents of basic income argue that it can reduce financial poverty, but its impact strongly depends on implementation choices, system characteristics, and socio-economic context. Some versions of basic income may help reduce poverty, but at a significant cost and with potential political challenges. A partial basic income complementing existing provisions appears to be more sensible than a complete replacement, and the simplicity of basic income tends to be exaggerated.