Unemployment Benefits and Basic Income. Economic Performance, Income Inequality and Social Welfare

Two social security schemes are compared in the long run, one based on a basic income and on the other on unemployment benefits. The analysis is carried out in an overlapping generations model in which agents have to decide whether to become skilled or remain unskilled, and how much time to devote to work. We study the effects of both social security systems on the economic incentives determining individual behavior. We compare their implications in terms of economic performance, income inequality, and social welfare at the steady state. The laissez-faire situation is taken as the bench mark.