---And the actual study

In this paper, we compare subsidies of low-wage work, such as the Earned Income Tax Credit (EITC), to unconditional cash transfers—or what is commonly referred to as a universal basic income (UBI).2 The EITC helps families with low earnings but does not provide any support to those without earnings. It is an extremely popular policy because it redistributes income to low-earning families while encouraging work. In contrast, a UBI provides unconditional support to everyone and is often combined with a progressive tax on earnings. In this paper we argue that a UBI would be preferable to subsidies of low-wage work on economic, moral, and political grounds. The economic arguments for a UBI are twofold: • First, subsidies of low-wage work, such as an EITC, distort incentives; they cause people to work more than they otherwise would. A UBI would reduce the resulting inefficiency, so that there would be a bigger economic pie to distribute, and more money would go to those who need it. In this paper, we call this the “magic bucket”: the idea that by moving from a world in which we provide subsidies of low-wage work to one in which we provide universal transfers, we incur societal savings. As we reduce conditional (EITC) payments to support an unconditional (UBI) transfer system, individuals work less, which leads to government savings from fewer and smaller EITC transfers. As a result, you can reduce EITC payments by less than $1 to pay for $1 of UBI. Second, subsidies of low-wage work depress wages. By providing incentives for people to work, such subsidies allow employers to pay less, so they are, at least in part, a transfer to employers rather than workers. Replacing subsidies of lowwage work with a UBI would improve workers’ bargaining position and wages. We also argue that there are important moral and political considerations for unconditional transfers, such as a UBI, over conditional ones, such as an EITC: • First, a UBI would increase individual liberty and would improve fairness. This sort of benefit would allow people in abusive relationships with domestic partners, employers, or government administrators to leave the situation without fear of material destitution. Unconditional benefits would also improve fairness by remunerating unpaid care work (particularly by women), civic engagement, and cultural production. • Second, a UBI would be politically more sustainable and popular than narrowly targeted transfers. Universal benefits tend to have stronger democratic support than conditional benefits for the poor. In summary, these arguments suggest that a UBI would give more to those who need it, would promote liberty, and would be politically viable and stable. If one accepts these arguments, a political case needs to be made for a UBI. Any such case must grapple with and overcome distinctions drawn between the “deserving” and the “undeserving” poor. Such distinctions underpin the popularity of conditional transfers among politicians, but that underpinning has historically often been based on racial discrimination. A case for a UBI also needs to provide alternative narratives of a shared fate and shared interests, of a common defense of liberty, and of the valuable contributions of those working outside paid labor.