From means-tested programs to Universal Basic Income-The role of endogenous participation in transfer programs

• 成果类型: Article
• 署名作者: Yang, Fan
• 署名单位: University of Nottingham Ningbo China; McGill University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2026.103960
• 发表日期: 2026
• 关键词: tax; progressivity; INEQUALITY; education; DYNAMICS

摘要

This paper studies the effects of replacing the Earned Income Tax Credit (EITC) with a Universal Basic Income (UBI) in an environment where EITC take-up is incomplete. In contrast, UBI ensures full participation by design, extending benefits to households who do not take up the EITC, at the cost of higher fiscal expenditures. I study this trade-off between expanded coverage and fiscal cost using a life-cycle model with an endogenous EITC participation decision that replicates the observed eligibility and take-up patterns. The results show that a generous UBI ($12,000 annually) reduces welfare due to the substantial fiscal burden it entails, whereas a modest UBI ($3500 per year) improves welfare by reaching previously uncovered households at only a moderate fiscal cost. These findings highlight the importance of the program participation margin in evaluating policy reforms.