Accessible Requires Authentication Published by De Gruyter April 27, 2020

Basic Income and Social Sustainability in Post-Growth Economies

Mikael Malmaeus ORCID logo, Eva Alfredsson and Simon Birnbaum
From the journal Basic Income Studies

Abstract

A central task in efforts to identify pathways to ecologically and socially sustainable economies is to reduce inequality and poverty while reducing material consumption, which has recently inspired future post-growth scenarios. We build a model to explore the potential of a universal basic income (UBI) to serve these objectives. Starting from the observation that post-growth trajectories can take very different forms we analyze UBI in two scenarios advanced in the literature. Comparing UBI in a “local self-sufficiency” economy to a UBI in an “automation” economy, we show that although both scenarios satisfy central sustainability criteria, the impact of a UBI would differ greatly between these contexts. Our analysis shows that a UBI is less compatible with a labor-intensive local self-sufficiency economy than a capital-intensive, high tech economy. We conclude that the feasibility and attractiveness of a UBI in a post-growth scenario depends greatly on the specific characteristics of the economy.


Corresponding author: Mikael Malmaeus,IVL Swedish Environmental Research Institute, Stockholm, Sweden, E-mail:

Appendix I Equations and definitions

  • Lr = flow of labor, real units

  • Lm = flow of labor, monetary units

  • Kr = flow of capital, real units

  • Km = flow of capital, monetary units

  • LCreln = Labor use for commodity n, %

  • LCabsrn = Labor use for commodity n, real units

  • LCabsmn = Labor use for commodity n, monetary units

  • KCreln = Capital use for commodity n, %

  • KCabsrn = Capital use for commodity n, real units

  • KCabsmn = Capital use for commodity n, monetary units

  • Yrn = Production of commodity n, real units

  • Ymn = Production of commodity n, monetary units

  • D = Price level (deflator)

  • Prn = Relative price of commodity n, monetary unit per real unit

  • ILm = Labor income of income decile m, monetary units

  • IKm = Capital income of income decile m, monetary units

  • T = tax rate, %

  • R = public revenue, monetary units

  • s = part of R used for public consumption, %

  • PC = public consumption, monetary units

  • BI = basic income, monetary units

  • TImm = total income of income decile m, monetary units

  • TIrm = total income of income decile m, real units

  • DImm = disposable income of income decile m, monetary units

  • DIrm = disposable income of income decile m, real units

Production and Relative Prices of Goods and Services

Real use of labor and capital, Lr and Kr, are set by the model user

Monetary use of labor and capital are fixed in the model: Lm = 67, Km = 33

The relative distribution of capital between the three commodities is fixed in the model:

(A1)KCrel1=9
(A2)KCrel2=30
(A3)KCrel3=61

The relative distribution of labor between the three commodities is a function of the relative capital intensity of the economy:

(A4)LCrel1=100LCrel2LCrel3
(A5)LCrel2=45
(A6)LCrel3=200/100*(Kr/(Lr+Kr))0.1122

The function is designed so that LCrel3 asymptotically approaches zero with growing capital intensity.

(A7)LCabsrn=Lr*LCreln/100
(A8)LCabsmn=Lm*LCreln/100
(A9)KCabsrn=Kr*KCreln/100
(A10)KCabsmn=Km*KCreln/100

Production is Determined by the Sum of Inputs

(A11)Yrn=LCabsrn+KCabsrn
(A12)Ymn=LCabsmn+KCabsmn

The general price level is determined by the ratio between real inputs (and output) and monetary inputs (and output)

(A13)D=(Lr+Kr)/(Lm+Km)=(Yr1+Yr2+Yr3)/(Ym1+Ym2+Ym3)

The relative prices of the three commodities are determined by the relation between the monetary value of production and the real quantity of production of each commodity:

(A14)Prn=D*Ymn/Yrn

Distribution of Income

The pre-distribution of income, IL1, IL2, … ILm and IK1, IK2, … IKm, is defined by the user of the model, so that IL1 + IL2 + … + ILm = 100 and IK1 + IK2 + … + IKm = 100.

Redistribution is handled by a flat tax on labor and capital incomes. The tax rate, T, is set by the model user. Public revenue is given by:

(A15)R=T*(Lm+Km)

Public revenue is distributed between public consumption and basic income so that

PC=Rs*/100
BI=R(100-s)/100

Total income includes after-tax labor and capital incomes, public consumption and basic income:

(A16)TImm=ILm(100T)Lm/100+IKm(100T)Km/100+0.1PC+0.1BI

Disposable income includes after-tax labor and capital incomes and basic income:

(A17)DImm=ILm*(100T)*Lm/100+IKm*(100T)*Km/100+0.1*BI

Real incomes are given by monetary incomes multiplied by the price level.

(A18)TIrm=D*TImm
(A19)DIrm=D*DImm

Appendix II Results

In this appendix income distributions are shown in the scenarios in monetary units (Table A1, A3, A5 and A7) and real units (Table A2, A4, A6 and A8), respectively.

Table A1:

Distribution of different incomes in the Base case zero, monetary units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 10.0000.02.52.5
Decile 21.0001.02.53.5
Decile 32.0002.02.54.5
Decile 42.5002.52.55.0
Decile 54.5004.52.57.0
Decile 65.5005.52.58.0
Decile 76.6006.62.59.0
Decile 87.6007.62.510.0
Decile 99.10.209.32.511.8
Decile 1011.624.6036.22.538.7
Sum5024.807525100
Table A2:

Distribution of different incomes in the Base case zero, real units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 100002.52.5
Decile 21.0001.02.53.5
Decile 32.0002.02.54.5
Decile 42.5002.52.55.0
Decile 54.5004.52.57.0
Decile 65.5005.52.58.0
Decile 76.6006.62.59.0
Decile 87.6007.62.510.0
Decile 99.10.209.32.511.8
Decile 1011.624.6036.22.538.7
Sum5024.807525100
Table A3:

Distribution of different incomes in the Base case scenario, monetary units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 1003.03.02.55.5
Decile 20.603.03.62.56.1
Decile 31.203.04.22.56.7
Decile 41.503.04.52.57.0
Decile 52.703.05.72.58.2
Decile 63.303.06.32.58.8
Decile 73.903.06.92.59.4
Decile 84.503.07.52.510.0
Decile 95.40.13.08.62.511.1
Decile 106.914.73.024.72.527.1
Sum3014,9307525100
Table A4:

Distribution of different incomes in the Base case scenario, real units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 100332.55.5
Decile 20.6033.62.56.1
Decile 31.2034.22.56.7
Decile 41.5034.52.57.0
Decile 52.7035.72.58.2
Decile 63.3036.32.58.8
Decile 73.9036.92.59.4
Decile 84.5037.52.510.0
Decile 95.40.138.62.511.1
Decile 106.914.7324.72.527.1
Sum3014.9307525100
Table A5:

Distribution of different incomes in the Local self-sufficiency scenario, monetary units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 10.003.73.72.56.2
Decile 20.503.74.22.56.7
Decile 31.003.74.72.57.2
Decile 41.303.75.02.57.5
Decile 52.303.76.02.58.5
Decile 62.803.76.52.59.0
Decile 73.303.77.02.59.5
Decile 83.803.77.52.510.0
Decile 94.60.13.78.42.510.9
Decile 105.912.43.722.02.524.5
Sum2512.5377525100
Table A6:

Distribution of different incomes in the Local self-sufficiency scenario, real units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 100332.05.1
Decile 20.4033.52.05.5
Decile 30.8033.92.05.9
Decile 41.0034.12.06.1
Decile 51.9034.92.07.0
Decile 62.3035.32.07.4
Decile 72.7035.82.07.8
Decile 83.1036.22.08.2
Decile 93.80.136.92.08.9
Decile 104.810.2318.02.020.1
Sum2110.331622082
Table A7:

Distribution of different incomes in the Automation scenario, monetary units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 10.0033.02.55.5
Decile 20.6033.62.56.1
Decile 31.2034.22.56.7
Decile 41.5034.52.57.0
Decile 52.7035.72.58.2
Decile 63.3036.32.58.8
Decile 73.9036.92.59.4
Decile 84.5037.52.510.0
Decile 95.40.138.62.511.1
Decile 106.914.7324.72.527.1
Sum3014.9307525100
Table A8:

Distribution of different incomes in the Automation scenario, real units – share of total GDP.

Labor incomeCapital incomeBasic incomeDisposable incomePublic consumptionTotal income
Decile 100332.55.5
Decile 20.6033.62.56.1
Decile 31.2034.22.56.7
Decile 41.5034.52.57.0
Decile 52.7035.72.58.2
Decile 63.3036.32.58.8
Decile 73.9036.92.59.4
Decile 84.5037.52.510.0
Decile 95.40.138.62.511.1
Decile 106.914.7324.72.527.1
Sum3014.9307525100

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Received: 2019-08-02
Accepted: 2020-03-24
Published Online: 2020-04-27

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