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Macroeconomic effects of basic income funded by land holding tax

La, Jung Joo (2023): Macroeconomic effects of basic income funded by land holding tax.

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Abstract

This study examines the macroeconomic effects of the introduction of a scheme to pay a basic income of approximately $900 per year to each citizen through land holding tax. In contrast to the existing literature, this study deals with the issue of whether household members decide to sell land due to a sharp increase in the land holding tax rate to raise funds for the payment of basic income. Furthermore, this study uses the relationship between holding assets and reservation wages to solve the problem of determining whether household members supply labor in accordance with the payment of basic income. Simulation results obtained using data for Korea show that the introduction of the scheme to pay the basic income decreases the real GDP, total labor demand, and social welfare by 1.3%, 0.3%, and 0.4%, respectively.

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