An Alternative Route to a Basic Income: The Transition from Conditional to Unconditional Social Secutity

Abstract

This article explores an alternative route towards a basic income regime. The normal route is to start with a partial basic income which is gradually increased during a long period of time. This approach has several disadvantages: social security becomes a mixture of two regimes, incentives to perform paid work for persons neither performing paid work nor entitled to social security benefits are reduced, the partial basic income paid to this group is to a large extent unnecessary from the perspective of guaranteeing a minimum income, and finally it does not reduce the poverty trap from below, but from above. The alternative route uses three characteristics of the present conditional social security system (tax allowance, minimum wage and withdrawal rate) to implement a gross-net earnings trajectory which closely resembles the gross-net earnings trajectory belonging to a basic income system.