ECS3704 ASSIGNMENT 3 PORTFOLIO 2026
DUE MAY 2026
Assessment 3: Part A: See the TUT101 on assessment criteria and essay writing.
It is argued that the advancement of Artificial Intelligence (AI) will render some
workers redundant, leading to increased unemployment, poverty, and inequality.
Some economists are calling for the introduction of a Basic Income Grant (BIG) to
mitigate these challenges.
Compare, with the aid of diagrams, the effects of Basic Income Grant (BIG) and
Universal Basic Income Grant (UBI) on poverty and inequality
The fear that technology could replace many jobs, together with ongoing high levels of
inequality, has made the Basic Income Grant (BIG) and Universal Basic Income (UBI)
important topics in policy discussions. In South Africa, which is known as the most
unequal country in the world (World Bank, 2018b, cited in Black et al., 2019, p. 143),
these ideas are seen as possible ways to reduce poverty and unemployment. Although
both systems give people cash payments, they work differently because they target
people in different ways and have different effects on the economy. A targeted BIG (or
Negative Income Tax) and a universal, unconditional UBI can have different effects on
poverty, income inequality, and labour supply. Concepts from public economics can be
used to evaluate the advantages and disadvantages of each system.
, 1. Defining BIG and UBI: A Conceptual Distinction
Although the terms are often used as if they mean the same thing, there is an important
difference between a Basic Income Grant (BIG) and a Universal Basic Income (UBI). A
UBI is a cash payment given to every citizen without any conditions, no matter their job
status, income, or level of wealth (Black et al., 2019, p. 169–170). It is a completely
universal form of social assistance that is not targeted at specific groups.
In contrast, a BIG often refers to a non‑universal or targeted cash transfer. In the South
African policy discourse, the term BIG typically denotes a grant provided to a specific
group such as all working‑age adults but phased out as the beneficiary’s own income
rises (Black et al., 2019, p. 183‑184). In economic terms, this makes a BIG functionally
equivalent to a Negative Income Tax (NIT) , which guarantees a minimum income level
but reduces the grant by a set percentage as market income increases (Black et al.,
2019, p. 183). This phase‑out is the critical mechanism that defines its targeting and
shapes its economic consequences.
2. Effects on Poverty and Inequality
Both BIG (NIT) and UBI have the capacity to reduce poverty and inequality, but their
efficiency and magnitude of impact differ significantly.
2.1 Impact on Poverty
Both grants provide a direct income floor, which will reduce the poverty gap (the amount
of money needed to raise all poor individuals to the poverty line) and the poverty
DUE MAY 2026
Assessment 3: Part A: See the TUT101 on assessment criteria and essay writing.
It is argued that the advancement of Artificial Intelligence (AI) will render some
workers redundant, leading to increased unemployment, poverty, and inequality.
Some economists are calling for the introduction of a Basic Income Grant (BIG) to
mitigate these challenges.
Compare, with the aid of diagrams, the effects of Basic Income Grant (BIG) and
Universal Basic Income Grant (UBI) on poverty and inequality
The fear that technology could replace many jobs, together with ongoing high levels of
inequality, has made the Basic Income Grant (BIG) and Universal Basic Income (UBI)
important topics in policy discussions. In South Africa, which is known as the most
unequal country in the world (World Bank, 2018b, cited in Black et al., 2019, p. 143),
these ideas are seen as possible ways to reduce poverty and unemployment. Although
both systems give people cash payments, they work differently because they target
people in different ways and have different effects on the economy. A targeted BIG (or
Negative Income Tax) and a universal, unconditional UBI can have different effects on
poverty, income inequality, and labour supply. Concepts from public economics can be
used to evaluate the advantages and disadvantages of each system.
, 1. Defining BIG and UBI: A Conceptual Distinction
Although the terms are often used as if they mean the same thing, there is an important
difference between a Basic Income Grant (BIG) and a Universal Basic Income (UBI). A
UBI is a cash payment given to every citizen without any conditions, no matter their job
status, income, or level of wealth (Black et al., 2019, p. 169–170). It is a completely
universal form of social assistance that is not targeted at specific groups.
In contrast, a BIG often refers to a non‑universal or targeted cash transfer. In the South
African policy discourse, the term BIG typically denotes a grant provided to a specific
group such as all working‑age adults but phased out as the beneficiary’s own income
rises (Black et al., 2019, p. 183‑184). In economic terms, this makes a BIG functionally
equivalent to a Negative Income Tax (NIT) , which guarantees a minimum income level
but reduces the grant by a set percentage as market income increases (Black et al.,
2019, p. 183). This phase‑out is the critical mechanism that defines its targeting and
shapes its economic consequences.
2. Effects on Poverty and Inequality
Both BIG (NIT) and UBI have the capacity to reduce poverty and inequality, but their
efficiency and magnitude of impact differ significantly.
2.1 Impact on Poverty
Both grants provide a direct income floor, which will reduce the poverty gap (the amount
of money needed to raise all poor individuals to the poverty line) and the poverty
