<P> A basic income (or negative income tax) is a system of social security that periodically provides each citizen with a sum of money that is sufficient to live on frugally . It is argued that recipients of the basic income would have considerably more bargaining power when negotiating a wage with an employer as there would be no risk of destitution for not taking the employment . As a result, the jobseeker could spend more time looking for a more appropriate or satisfying job, or they could wait until a higher - paying job appeared . Alternatively, they could spend more time increasing their skills in university, which would make them more suitable for higher - paying jobs, as well as provide numerous other benefits . Experiments on Basic Income and NIT in Canada and the USA show that people spent more time studying while the program was running . </P> <P> Proponents argue that a basic income that is based on a broad tax base would be more economically efficient, as the minimum wage effectively imposes a high marginal tax on employers, causing losses in efficiency . </P> <P> A guaranteed minimum income is another proposed system of social welfare provision . It is similar to a basic income or negative income tax system, except that it is normally conditional and subject to a means test . Some proposals also stipulate a willingness to participate in the labor market, or a willingness to perform community services . </P> <P> A refundable tax credit is a mechanism whereby the tax system can reduce the tax owed by a household to below zero, and result in a net payment to the taxpayer beyond their own payments into the tax system . Examples of refundable tax credits include the earned income tax credit and the additional child tax credit in the US, and working tax credits and child tax credits in the UK . Such a system is slightly different from a negative income tax, in that the refundable tax credit is usually only paid to households that have earned at least some income . This policy is more targeted against poverty than the minimum wage, because it avoids subsidizing low - income workers who are supported by high - income households (for example, teenagers still living with their parents). </P>

A minimum wage that is set below a markets equilibrium wage will result in