Abstract

The drawbacks of traditional income support policies – based on means tested and categorical transfers – are well known: welfare dependence, welfare stigma, low take-up rate, incentives to income under-reporting, high administration costs etc. Reforms adopted in many countries (In-work benefits, Tax credits etc.) have improved work incentives but introduced new complications. During the last two decades, three processes have contributed to put the current welfare policies under stress and possibly to worsen their intrinsic drawbacks. Globalization and technological progress (automation), while creating big aggregate benefits, also imply massive adjustments in re-allocation of physical and human resources. Job losses and skill destruction and an increased demand for income support interventions– at least in the short-medium term – are natural consequences. The “Big Crisis” of the last decade obviously worsened the scenario. More recently, in many countries, a new interest emerged for a new reform direction: less conditioning, simpler designs and ultimately some form of Unconditional Basic Income (UBI), i.e. a policy based on universal non-means tested transfers. The first part of the talk will focus on the theoretical foundations of UBI, with focus on the dimensions of efficiency and equity. The second part will survey the empirical evidence: quasi-experiments, experiments, simulations, including some results of a project that identifies optimal income support policies with a method combining microsimulation and numerical optimization.