Munich Personal RePEc Archive

Universal basic income and skill-biased technological change

Coelho, José (2020): Universal basic income and skill-biased technological change.

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Abstract

In the last decades, income inequality has been on the rise in the U.S. The growing skill premium suggests the pivotal role of skill-biased technological change (SBTC) in promoting the observed increase in inequality levels. In this context, labor income tax structures have been central to the policy debate. I develop an overlapping generations model to perform a welfare evaluation of Universal basic income (UBI) tax structures and verify how these interact with SBTC. I find that an UBI system would have improved social welfare in 2010 when compared to the existing tax system and determine that this result is primarily motivated by SBTC.

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