Universal basic income: A viable policy alternative?

• Published date: 01 October 2019
• Author: Pavel Ciaian,d'Artis Kancs,Andrey Ivanov
• DOI: http://doi.org/10.1111/twec.12798
• Date: 01 October 2019

World Econ. 2019;42:2975–3000.

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2975

wileyonlinelibrary.com/journal/twec

Received: 31 July 2018

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Revised: 30 January 2019

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Accepted: 19 March 2019

DOI: 10.1111/twec.12798

ORIGINAL ARTICLE

Universal basic income: A viable policy alternative?

PavelCiaian1

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AndreyIvanov2

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d'ArtisKancs1

1Joint Research Centre (JRC),European Commission, Ispra, Italy

2European Union Agency for Fundamental Rights, Vienna, Austria

KEYWORDS

education, integration policy, labour market, Roma, social marginalisation, universal basic income

1

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INTRODUCTION

The marginalisation of Roma is widespread in Europe and takes various forms; it encompasses al-

most all aspects of life spanning from education and employment to health and housing (FRA, 2018;

O'Higgins & Ivanov, 2006). In order to improve the Roma situation, there is a strong political will-

ingness and commitment in the EU (European Parliament 2011). It is surprising, however, how little

robust scientific evidence regarding potential costs and benefits of Roma integration policies has

supported the policy design and implementation so far.

To narrow this evidence gap and provide policymakers with the missing scientific evidence, the

present study undertakes a comparative analysis of long‐term economic, budgetary and fiscal costs and

benefits of alternative Roma integration policies in the areas of education and employment in five EU

Member States with the largest share of the Roma population—Bulgaria, the Czechia, Hungary,

Slovakia and Romania.1 We employ a general equilibrium approach that allows us to assess not only the

direct impact of selected Roma integration policies but also to capture all induced feedback effects.

In the five studied EU Member States from the Central and Eastern Europe (CEE) live around 4mil-

lion Roma (Council of Europe, 2012). Many Roma communities are among the most socially and eco-

nomically marginalised groups in these countries; they perform worse than the mainstream society in

almost all socioeconomic spheres of life, being relegated to the fringe of society. On average, Roma are

found to have lower income level, higher poverty rate regardless of the poverty metrics applied (Ivanov

& Kagin, 2014), and higher unemployment rate (FRA, 2018), and they are less educated, face higher

incidence of undernourishment, and have lower life expectancy, higher child mortality, less access to

drinking water, sanitation and electricity, etc. (Kertesi & Kézdi, 2011; O'Higgins & Ivanov, 2006).

These evident and sizeable well‐being differences between Roma and the mainstream population

make the Roma inclusion issue high on the policy agenda in EU Member States. The key priorities of

1 In the present study, we neglect impacts on humanitarian, human right and many social issues, the positive impact of which

is uncontested though.

This is an open access article under the terms of the Creat ive Commo ns Attri bution-NonCo mmercial License, which permits use, distribution

and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.

© 2019 The Authors. The World Economy Published by John Wiley & Sons Ltd

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CIAIAN etAl.

inclusion policies include the integration of Roma into the schooling system, labour markets and im-

proving access to social services and infrastructure (Achim, 2004; Ciaian & Kancs, 2016; Ringold,

Orenstein, & Wilkens, 2005). At the European level, two policy initiatives (and policy frameworks)

highlight the political importance of the Roma inclusion: the Decade of Roma Inclusion (2005–15) and

the EU Framework for National Roma Integration Strategies (2011–20). Similarly important is the Paris

Declaration,2 which aims at mobilising the education system to prevent and tackle marginalisation, in-

tolerance, racism and radicalisation, and to preserve a framework of equal opportunities for all, including

an inclusive education for all children, independent of the social background. Further, the European

Commission has increased its policy support under the European Semester of the Europe 2020 strategy

and has linked the EU funding to the policy implementation. For example, in 2016 the European

Commission issued Country Specific Recommendations to improve access to the schooling and em-

ployment of Roma in five EU Member States with most acute marginalisation challenges, that is,

Bulgaria, the Czechia, Hungary, Romania and Slovakia. In addition, there is also legislation for fighting

discrimination against Roma (the Racial Equality Directive),3 as well as European Structural and

Investment Funds can be used for the Roma inclusion in the EU.4 At the national level, policy instru-

ments include targeted national Roma integration strategies and measures, reforms of mainstream poli-

cies impacting Roma and the enforcement of an anti‐discrimination legislation. Both national and EU

funds are being used either for Roma‐targeted measures or for inclusive mainstream reforms (European

Commission, 2019).

Despite a growing demand for and supply of Roma integration policies, the existing evidence

base supporting the design, implementation and evaluation of Roma integration policies is scarce

and inconclusive. On the one hand, there are only few studies in the scientific literature looking at

these questions systematically. On the other hand, the few existing studies apply at most a partial

equilibrium approach or undertake a reduced form analysis to estimate costs and benefits of Roma

integration policies. For example, Kertesi and Kézdi (2006) have estimated long‐term budgetary ef-

fects of investments in Roma children in the secondary education in Hungary. Bogdanov and Angelov

(2007) have estimated costs and benefits of an improved education of Roma in Bulgaria. Marcinčin

and Marcinčinová (2009) and a team of the World Bank experts have conducted a similar analysis for

Slovakia (World Bank, 2012). There have been also attempts to estimate economic and fiscal costs

and benefits of the Roma inclusion in the labour market in the Czechia and Romania. Despite provid-

ing some evidence, an important limitation of reduced form/partial equilibrium analyses is that they

do not take into account economy‐wide interactions and medium to long‐run feedback effects and

adjustments on labour markets. As a result, not accounting for all direct and indirect rebound effects

provides only a partial and/or biased picture of true policy effects.

In order to narrow this evidence gap, the present study undertakes a holistic analysis of long‐run

economic, budgetary and fiscal costs and benefits of selected Roma inclusion policies in five EU

countries from the CEE: Bulgaria, the Czechia, Hungary, Slovakia and Romania. We have selected

these five countries, because more than two‐thirds of the total EU Roma population reside in these EU

Member States. The second reason for choosing these countries is that the Roma marginalisation is

particularly widespread and represents an acute and rapidly growing socioeconomic problem in these

countries (see Appendix S1). They cause frictions not only at the national level, but may also have

2 Declaration on promoting citizenship and the common values of freedom, tolerance and non‐discrimination through

education adopted by the Commissioner Navracsics and Education Ministers in 2015; see https ://webga te.ec.europa.eu/fpfis/

mwiki s/euryd ice/image s/1/14/Leafl et_Paris_Decla ration.pdf.

3 Council Directive 2000/43/EC, http://eur-lex.europa.eu/legal-conte nt/EN/TXT/?uri=celex :32000 L0043

4 ESIF Investment priority 9(ii) “Integration of marginalised communities such as the Roma.”