For example, right now Livable Wage hovers around \$20 an hour. That's around \$40,000 a year.
Let's say the US somehow will give \$50,000 a year as a "Guaranteed basic income".
How high will the "Livable Wage" go?
For example, right now Livable Wage hovers around \$20 an hour. That's around \$40,000 a year.
Let's say the US somehow will give \$50,000 a year as a "Guaranteed basic income".
How high will the "Livable Wage" go?
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Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.
The Consumer Price Index (CPI) is your best measure of inflation which is (put simply) the change in cost of a representative basket of goods. Each country measures this in a slightly different way.
If you are looking for a numerical increase in inflation, you'll be disappointed. A Basic Income has quite a few effects making this difficult to model. There are anticipated significant impacts on labour/leisure as well as consumption bundles. Also, inflation itself is difficult to model. To make things worse, many reserve banks target inflation with their monetary policy. So you're unlikely to ever get any empirical evidence as well.
Anyway:
Why would increasing income of lower income earners have an inflationary impact at all?
An increase in welfare should result in higher incomes. Higher income leads to higher consumption (or quantity demanded) which should lead to an increase in prices. But, this is only a one-off increase, not an ongoing source of inflation. I would be hesitant to call this inflation and would prefer to call it a permanent demand shock.
Unfortunately, I am not aware of any estimates of this impact but I would expect it the long term impact quite small. The higher the basic income, the greater the impact.
Also worth noting:
I can't think why this would be any more inflationary than any other form of welfare.
The question of inflation "caused by" UBI is an attempt to create model of transition, which can only be speculated on many front. Due to complexity, Universal Basic Income (UBI) is a highly complexity model, which will change human behavior of consumption base economy model. Assumption of UBI cause higher inflation is too early to tell, because it depends on the policies come together with it.
Assumption of UBI causing high inflation
Assumption of UBI causing economy stagnation
Assumption of UBI rewrite consumption base and economy growth model.
Since no countries have introduced a guaranteed basic income on a big enough scale to evaluate it's impact on inflation, there is no evidence to answer your answer directly.
However, there is quite some evidence that minimum wage hikes increase the prices of firms that pay minimum wages. See Aaronson et al 2008 for an example (http://jhr.uwpress.org/content/43/3/688.refs). If you see a guaranteed basic income as an implicit wage floor---nobody would work for less than the basic income---then we should expect that the basic income increases prices.
There are numerous problems with this question, but one of them is that a $50,000 per year per person basic income is impossible in the U.S. because per capita GDP was 55,837 in 2015.
A "guaranteed basic income of \$50,000" per person would require $\frac{50,000}{55,837} = 89.6\%$ of ALL U.S. economic output!! Given that government is already 17.5% of the U.S. economy and 89.6% + 17.5\% > 100%, we're already in the realm of physical impossibility. This is without even getting to the complete impossibility of tax collection at anything close to that magnitude.