Multilayered Emergent Phenomena Caused by Basic Income and Labor Supply on the Wider Economic System

Abstract

Despite the growing interest in basic income (BI) in recent years, the existing research has mainly focused on its impact on household finances. However, changes in household behavior may affect the actions of other decision makers, such as businesses and governments, leading to unanticipated outcomes. Therefore, any analysis of BI must use a model with multilayered feedback from the actions of individual decision makers. To actualize such a model, household budgets, firms, and other entities must autonomously determine production levels, prices, and other factors, thereby encompassing a complete circulation of funds. This study constructs a macroeconomic model using agent-based modeling as a basic framework to achieve these goals, and it analyzes the emergent behaviors generated by BI and the labor supply in the economic system. The results show that although BI brings about more equitable consumption by households, it also creates a unique phenomenon wherein Gross Domestic Product increases but economic activity in terms of capital investment stagnates. Upon examining the impact of BI, the results of this study present the need to examine the multilayered feedback influencing mutual decision makers, which arises from the behavioral changes of individual decision makers caused by BI.