Date of Award

Spring 5-12-2018

Degree Type

Honors Thesis


Economics and Finance

First Advisor

David Finnoff


Technological advances in digitalization and automation have begun to change the labor market in the United States. Automation is expected to replace a percentage of low and middle-income jobs in the United States. The changes in the labor market are predicted to result in job loss and displacement, increased inequality, and lower consumer demand. The social insurance programs currently employed in the United States are ill equipped to handle the changes in the labor market. This paper examines the effects of replacing unemployment benefits currently funded by states with a federally funded universal basic income. Existing and proposed basic income trials were examined to determine the effects on inequality. A universal basic income was also analyzed in both a labor market model and aggregate demand – aggregate supply model in order to determine the effect on wages and consumer demand. The research has indicated that the implementation of a basic income would raise wages as a result of increased bargaining power, lower inequality, and secure consumer purchasing power in the face of labor insecurity.