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Austerity aims to reduce government budget deficits through spending cuts, tax increases, or a combination of both. Most of the EU-countries are facing problems with public debts. As a rule, austerity policies increase unemployment. Consequently, the governments try to enhance employment by introducing more conditional social benefits to ‘make work pay’. The policy may backfire. If the level on purchasing power for low-income people is too low, market insecurity increase and may lead to long-term recession. In my presentation I discuss result from the conditional Dutch Activation Act (DAA) and the Finnish Activation (FA) model versus basic income (BI). Both the DAA and FA are recently evaluated. Neither did the DAA nor FA produce the wished-for outcomes. Results from the Finnish BI are soon available. In my presentation, I discuss pros and cons of budget-neutral (partial) BI basic income as a possible economic stabilisator and a guarantee of sufficient purchasing power for low-income people.
