Assessing the Economic Impacts of Universal Basic Income Policy in Iran: A Dynamic General Equilibrium Approach

Articles in Press

Document Type : Research Paper

Authors

1 PhD student in Public Sector Economics, Faculty of Economic and Administrative Sciences, University of Mazandaran, Babolsar, Iran

2 Dep. of Economics, Faculty of economics and Administrative Sciences, University of Mazandaran, Babolsar

3 Dep. of Theoretical Economics, Faculty of economics and Administrative Sciences, University of Mazandaran, Babolsar; Iran.

Abstract

The Universal Basic Income (UBI) scheme is a welfare policy in which the government provides a fixed, unconditional monthly payment to all citizens. Although the idea of UBI is not new, it has recently re-emerged due to growing concerns about the potential disappearance of many existing jobs as a result of new technologies such as artificial intelligence. This study develops a standard Dynamic Stochastic General Equilibrium (DSGE) model incorporating a UBI mechanism for the Iranian economy, taking into account key structural characteristics such as the government’s dependence on oil revenues and the impact of international sanctions.

Simulation results, based on Iran’s macroeconomic parameters, indicate that the UBI model is consistent with the Iranian economic structure. The analysis of shocks to the oil sector, capital income tax, labor wages, and consumption under alternative UBI financing scenarios shows that financing UBI through labor income taxation leads to higher labor supply and household welfare, while reducing long-run inflation. Financing UBI through oil revenues increases household consumption and welfare but reduces labor supply. Financing UBI via consumption or capital income taxes has only minor effects on labor supply, with negligible long-term changes in output, consumption, and household welfare.

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Main Subjects

Applied Theories of Economics

Articles in Press, Accepted Manuscript
Available Online from 19 July 2026

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