Welfare analysis of alternative poverty alleviation policies

This study compares the social welfare under welfare benefits programs and under universal basic income, subject to the balanced budget condition. The results show that, as the proportion of the poor class increases, both optimal levels and social welfare tend to decrease. A comparative analysis of the optimal social welfare reveals that basic income achieves higher social welfare than welfare benefits do when the proportion of the poor class is low; by contrast, welfare benefits achieve higher social welfare than basic income does when the proportion of the poor is high.