The Paul Douglas Institute

Simulating a supplementary UBI’s effects on the labor market, income distribution, and quality of life

We simulate the effects of a $500 per month Universal Basic Income (UBI) on the income distribution of Chicago. We generate a representative distribution of 10,000 Chicago incomes, then simulate the UBI transfer, a progressive income tax scheme to fund it, and the resulting decreases in labor supply. We find that our proposal leaves the poorest 78.8% of Chicago wealthier than before, and the poorest third will each see their incomes increase by at least 15%. We compare the UBI to three popularly-proposed alternative welfare policies. Finally, we combine observations about social conditions in Chicago with existing evidence from past UBI experiments to make qualitative predictions about the possible effects of UBI on quality-of-life outcomes such as mental health, nutrition, gender equality, hospitalization, and education.