Short-Term Labor Responses to Unconditional Cash Transfers
49 Pages Posted: 10 Apr 2019
Date Written: March 21, 2019
One major criticism of Universal Basic Income (UBI) is that unconditional cash transfers discourage recipients from working. We estimate the causal effects of a universal cash transfer on short-run labor market activity by exploiting the timing and variation of a long-running unconditional and universal transfer: Alaska's Permanent Fund Dividend. We find evidence of both a positive labor demand and negative labor supply response to the transfers. Altogether, a $1,000 increase in the per-person disbursement leads to a 0.2% labor-market contraction on an annual basis, suggesting that concerns over adverse labor market impacts from modest universal transfers may be overstated.
Keywords: Permanent Fund Dividend, labor supply, universal income
JEL Classification: J2, H24, I38, H53
Suggested Citation: Suggested Citation