Welfare versus Work Under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments

65 Pages Posted: 2 Aug 2021

See all articles by Chris Riddell

Chris Riddell

University of Waterloo - Department of Economics

W. Craig Riddell

University of British Columbia (UBC) - Department of Economics

Abstract

The Income Maintenance Experiments have received renewed attention due to growing international interest in a Basic Income. Proponents viewed a Negative Income Tax as a replacement for traditional welfare with stronger work incentives and reduced poverty. However, existing labor supply estimates for single parents are uniformly negative. We re-assess the experimental evidence and find randomization failure in two NITs (Gary and Seattle). In Denver and Manitoba, we find a positive labor supply response for those on welfare prior to random assignment. Our results provide strong evidence that a NIT can increase work activity among single parents on welfare.

JEL Classification: C9, I38, J2

Suggested Citation

Riddell, Chris and Riddell, W. Craig, Welfare versus Work Under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments. IZA Discussion Paper No. 14585, Available at SSRN: https://ssrn.com/abstract=3896797 or http://dx.doi.org/10.2139/ssrn.3896797

Chris Riddell

University of Waterloo - Department of Economics ( email )

Waterloo, Ontario

W. Craig Riddell (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

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Vancouver, BC V6T 1Z1
Canada
604-822-2106 (Phone)

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