Universal basic income would not reduce poverty, OECD concludes

30 May 17

Moving to a system of universal basic income would produce more winners than losers among low-income groups but prove ineffective in reducing poverty, the OECD has found.

 

 

In a study on , it said that in countries such as Finland and France – where there is relatively good benefit coverage among poorer households – poverty would rise under UBI. While spending would be higher, it would be less well targeted.

Current benefit spending was not enough to finance a basic income close to the poverty line in any of 23 countries studied, it noted.

Looking at the UK, France, Finland and Italy, the OECD found that basic income would see losses among both the poor and the rich, with those in the middle more likely to gain.

If the UBI was anchored on existing minimum-income benefits, many of those who were lifted out of poverty by things like unemployment insurance or early retirement benefits would fall back into poverty again, the report said.

Even in countries such as Italy, where benefit spending is not well targeted on poorer households, “poverty would be roughly the same in the case where existing spending was used to give everyone a basic income rather than targeted on specific groups”.

In the UK, paying a basic income at a revenue neutral level would be “significantly below the level of existing guaranteed minimum-income benefits, so it is perhaps unsurprising that this leads to much higher levels of poverty”.

The OECD noted that there was growing interest in the basic income concept – under which the state pays an unconditional income to all citizens – but Finland had the only national pilot.

Discussions were however in progress in France and Quebec, while a number of municipalities had expressed interest including Oakland, California, Livorno in Italy and districts in Ontario.

It said that while an opinion poll in the European Union had found 68% support for the idea, there was “evidence that support fades when people are shown details of feasible benefit amounts or of the tax rises needed to finance it”.

 

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