International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Universal Basic Income: A Fix for Means-Tested Welfare
Yuliu Huang

Universal basic income (UBI) has emerged as a hotly debated policy proposal around the world, and there have been calls for UBI to replace the heavily scrutinized welfare system in the United States. In this paper, I use the general equilibrium model to explain how data from developing nations demonstrate the great potential of UBI in the United States. Studies find that UBI removes the work disincentive effect caused by means-tested welfare, encourages people to accumulate assets, and provides significant benefits for children. Furthermore, I refute the critics of UBI who disparage it on the basis of cost and temptation goods. I conclude that UBI is the optimal replacement to means-tested welfare because not only does it benefit individuals by lifting them out of poverty, but it also leads to positive macroeconomic results.

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