Abstract

ORTIZ, Carlos Humberto. Minimum Wage, Unemployment Insurance, and Universal Basic Income in a Wealth Concentration Process: A Theoretical Approach. Lect. Econ. [online]. 2023, n.98, pp.7-37.  Epub Oct 20, 2023. ISSN 0120-2596.  https://doi.org/10.17533/udea.le.n98a348515.

Ortiz and Castillo (2020) built a multisector economic model where concentration of capital ownership diminishes the society’s purchasing power. After a certain concentration threshold is overcome, labour unemployment rises due to the lack of effective demand, the wage rate must be set to the minimum, and the distribution of income shifts in favour of capital. Based on that approach, this paper analyses two alternative policies: an unemployment insurance and a universal basic income. The unemployment insurance program is fairer than the competitive outcome but not efficient, whilst the optimal universal basic income is fairer and efficient. A minimum wage rate that minimizes the unemployment rate is also found.

Keywords : non-homothetic and satiable preferences; increasing returns; capital ownership concentration; purchasing power capacity; unemployment insurance; universal basic income.

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