Subsistence consumption and universal income: analysis of well-being in an economy of heterogeneous agents

• Grant number: 24/05535-4
• Support Opportunities: Scholarships in Brazil - Master
• Start date: January 01, 2025
• End date: November 30, 2025
• Field of knowledge: Applied Social Sciences - Economics - Social Welfare Economics
• Principal Investigator: Fernando Antônio de Barros Júnior
• Grantee: Lucinaldo Souza Santos Junior
• Host Institution: Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto (FEARP). Universidade de São Paulo (USP). Ribeirão Preto , SP, Brazil

Abstract

This project explores the role of income transfer policies in mitigating socioeconomic inequality, highlighting the adoption of a restriction on consumers: subsistence consumption. We address the lack of possibility of savings among low-income individuals - a stylized fact little explored in the literature. Advances and limitations of Conditional Cash Transfer (TCR) policies are analyzed, presenting Universal Basic Income (UBI) as an alternative. A combination of empirical analysis will be used, using research dataof Family Budgets (POF), with computer simulations. The study will examine the long-term effects of consumption restrictions on economic results, such as savings and income, using as a basis a model of rational expectations with heterogeneous agents, as in Aiyagari (1994). The work will also take into account the endogenous choice of work and study the transition of the economywith a TCR policy for UBI, simulated by a aggregate shock. In the end, we hope to contribute to the academic debate by analyzing the feasibility and impacts of UBI, exploring its effects on well-being, especially in the lower tail of the population's income distribution. The expected result is to show the importance of considering subsistence consumption as a restriction for future studies, and to analyze the transition to UBI as a promising path to reducing inequality and poverty.