Universal Basic Income

Abstract

Universal basic income (UBI) is an approach to income security that guarantees every individual in a political community (be it a nation or a subnational unit such as a state, province, or municipality) an unconditional and sufficient income to meet their basic needs, such as food, shelter, clothing, transportation, and the other necessities of life. UBI differs from state-sponsored social insurance schemes that became widespread in welfare states during latter half of the 20th century. Social insurance is funded by mandatory employer and/or employee contributions, and is tied to specific events affecting workers, such as loss of paid employment, parenting a new child, or retirement from the labor force. UBI also differs from last-resort income support programs such as social assistance (often called “welfare” or “workfare”). Such programs are meant to respond to those in immediate and dire financial need. Qualifying for social assistance depends on proving one’s eligibility to government officials through an application process that is typically complicated, demeaning, and stigmatizing. Social assistance often requires certain behaviors of recipients, such as participation in life-skills training or (in the case of workfare) work in low-skill jobs at low pay. In contrast, UBI is available to everyone on an unconditional basis, with no requirement for advance contributions, no stigma attached to those receiving it, and no work or other behavioral requirements. The Basic Income Earth Network defines UBI in this way: “A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” Basic income has the following five characteristics: (1) Periodic: paid at regular intervals (for example, every month), not as a one-off grant. (2) Cash payment: paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not, therefore, paid either in kind (such as food or services) or in vouchers dedicated to a specific use. (3) Individual: paid on an individual basis—and not, for instance, to households. (4) Universal: paid to all, without a means test. (5) Unconditional: paid without a requirement to work or to demonstrate willingness-to-work. Basic income (or approximations thereof) often go by different names, such as guaranteed income, citizens’ income, unconditional cash transfer, refundable tax credits, or social dividend.