The social policies on both sides of the Atlantic have been dominated by warfare policies since the 1970s. In these workfare policies, the payment of benefits is made based on conditional participation in job-promoting activities such as rehabilitation, training, work experience, and low or unpaid work. Those who are unable to fulfill these conditions lose their benefits. However, this stick approach has not worked very well. The traditional activation policies have proven incompetent in employing long-term unemployed people as well as preventing them from social exclusion. In this article, you will learn why the Universal Basic Income carrot work better than stick, Minimum income guarantee, etc.

What is Carrot and Stick Motivation?

The carrot and stick motivation is yet another traditional motivation theory. It believes in motivating people to evoke desired behaviors. The carrot defines rewards for desired behavior and the stick defines punishment for unwanted behavior. The rewards can be given in the form of promotion, money, and any non-financial or financial benefits. Mostly the punishments are exerted to push an individual towards the desired behavior. 

What is Universal Basic Income?

After learning about the carrot and stick motivation, let’s learn about Universal Basic Income. It is a regular cash payment that every individual receives. This payment is without any reference to the individual’s wealth or income and also without any conditions. Moreover, the payment amounts can vary according to broad demographic characteristics such as different payments for pensioners, children, and working-age adults. The Universal Basic Income is different from the Minimum Income Guarantee. 

What is Minimum Income Guarantee?

A minimum Income Guarantee (MIG) is an assurance that no one will fall below a certain set of income levels. It will allow people to live a dignified life. A MIG can be delivered through targeted welfare payments, employment, and also through other types of services or supports to be subsidized or provided by the state. Also read Innovations in Sustainable Urban Services Driving Development in Low Income Countries.

What is the Difference Between Universal Basic Income and Minimum Income Guarantee?

The Minimum Income Guarantee refers to a regular cash payment to certain members of a community and is unconditional. This Income Guarantee redistributes wealth to people who’ve historically been impacted by the lack of opportunities and to the people who need it the most. On the other hand, Universal Basic Income refers to all people getting a certain amount of regular cash regardless of their needs or income. After this, let’s learn- Does universal basic income carrot work better than stick?

Does Universal Basic Income Carrot Work Better Than Stick?

Finland conducted a 2-year basic income experiment between 2017-18. This experiment aimed to analyze if carrot works better than stick in encouraging unemployed citizens to seek income from entrepreneurial activities and to find new job offers. This experience studied three interlinked mechanisms of the Finnish public social services system.

The result of these experiments suggested that sticks aren’t welcomed but carrots do not seem to matter as well. The Universal Basic Income did not increase employment. Moreover, it was also observed that the current employment services are appreciated more than previously thought.

What are the Pros and Cons of Universal Basic Income?

After learning if the universal basic income carrot work better than stick, let’s learn about the pros and cons of Universal Basic Income (UBI)-

Pros Cons
The workers can wait for better wages or jobs due to UBI.Free income may not motivate people to get jobs.
UBI provides freedom for people to stay at home caring for a relative or to return to school.UBI can result in a falling labor force participation rate.
It may help remove the poverty trap from traditional welfare programs.It makes money for everyone no matter how rich they are.
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