impact of universal basic income on economy in Latvia

Context: The possibility of implementing a Universal Basic

Income

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in

Latvia

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in response to increasing automation threatening unemployment and social inequality is studied.

This

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hypothesis will be investigated by analyzing existing studies on Universal Basic

Income

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, developing models for its

implementation

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, and determining its costs and possible ways of financing it. The objective is to find out whether the

implementation

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of Universal Basic

Income

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could contribute to

Latvia

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's economic growth. Universal Basic

Income

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(

UBI

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): is a cash payment unconditionally given to all

citizens

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, with no means test or work requirement. The main idea is to provide a minimum

income

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to all

citizens

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, regardless of their social status, employment, or other indicators. Proponents argue that it is better than current welfare systems, but its

implementation

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requires resources and political will. Studies have examined the details in several countries including the U.S., U.K., Finland, Sweden, Australia, and New Zealand. Government transition programs appropriate for the XXI century include demands for

UBI

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that improve the lives of workers and help convince people. In the case of

Latvia

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, a social benefit called GMI is offered to guarantee a minimum level of

income

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for its

citizens

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. It is scheduled to increase to EUR 64 per person per month from January 2020.

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resembles the Universal Basic

Income

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, which is proposed as a measure to reduce inequality. The value of the full minimum

subsistence

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basket was

last

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calculated in 2013 and was EUR 253 per month. The authors attempt to calculate future values of the minimum

subsistence

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basket using the relationship between it and inflation or

GDP

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. The possibility of implementing a Universal Basic

Income

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in

Latvia

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, concluded that the calculated value of

UBI

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per person per month would be 150.92 EUR, which is 43.90 % lower than the necessary

subsistence

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minimum. 6 financing scenarios (budget deficit or tax increase) were made to assess the macroeconomic

effects

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of the

implementation

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of the

UBI

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, which showed

GDP

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growth in the first scenario and increased tax revenues in the fourth scenario, but with increasing unemployment if

citizens

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do not look for work. Inflation would increase in the first scenario and there would be no significant change in the others.

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, research on Universal Basic

Income

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in

Latvia

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has shown that,

although

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it is not feasible to implement it at the

subsistence

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level, its

implementation

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could stimulate the economic development of the country. The results of indicators

such

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as Gross Domestic Product (

GDP

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), inflation and consumer prices showed low correlation between them, so it was not possible to use the linear regression model for the full calculation of the minimum

subsistence

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basket. To improve the study of the

UBI

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, the impact of other variables affecting

GDP

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should be considered and the social

effects

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of the

UBI

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should be examined. Opinion: The final decision is the right one, as several financing scenarios are presented to evaluate the

effects

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of

UBI

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implementation

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, but it requires sufficient capital,

although

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the

UBI

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could contribute to

Latvia

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's economic development, other variables need to be considered and social

effects

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examined.