Exploring universal basic income: lessons for COVID-19 response and beyond

The fallout from the global spread of Coronavirus may change the way we look at social protection forever

Could cash transfers help offset some of the economic damage being wrought by COVID-19?

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The World Bank is not known for promoting universal social protection. Rather, it is seen as one of the strong supporters of poverty targeting. To many, it would, therefore, have come as a surprise when it recently published Exploring Universal Basic Income. A Guide to Navigating Concepts, Evidence, and Practices.

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Developing countries face several policy challenges unleashed by automation. Given the pace of technological change, upskilling strategies are likely not to be a panacea. Safety nets and wage subsidies may be desirable, but the question remains how to finance them (without making labor more costly and thus exacerbating a trend toward replacement).
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This guide provides an overview of social protection concepts, approaches, issues, debates and evidence, and a selection of key references and signposting to further resources. It primarily focuses on longerterm developmental social protection rather than humanitarian responses, and on low-income countries, including in contexts of shocks, and draws on other income contexts where appropriate. It is not intended to be an exhaustive guide.

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Let us imagine that, after his retirement from active political life in 1890, Otto von Bismarck would have spent the last one hundred and thirty years lecturing and researching on social policy across the world. Most recently, he worked as an unpaid advisor for the advocacy network 'The Future of the Welfare State in the Western Balkans'. Bismarck, of course, remains most famous for introducing an insurance-based welfare society as a way of deterring the working class from turning to socialism.

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Should developing countries give everyone enough money to live on? Interest in this idea has grown enormously in recent years, reflecting both positive results from a number of existing cash transfer programs and also dissatisfaction with the perceived limitations of piecemeal, targeted approaches to reducing extreme poverty.

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The Brazilian city of Marica recently launched a basic-income program that gives $33 monthly stipends to about one-third of its residents. Brazil already has a national policy that gives citizens around $10 per month if they vaccinate their children and send them to school.  But Marica's program will allow researchers to study how basic income affects local employment — specifically, whether it encourages people to join the labor market. 

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Stockton, California, has been giving some low-income residents a no-strings-attached check for $500 and tracking their spending and habits. The results: a noticeable improvement in their quality of life. New data released today shows how recipients are using the money, which they started to receive in February. The results undermine common criticisms of cash transfers: that the recipients will spend their money on frivolous items or use the cash to stop working.

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