Household Responses to Guaranteed Income: Experimental Evidence from Compton, California

Abstract

We study the effects of a two-year unconditional cash transfer program for lowincome households in Compton, California between 2021 and 2023. 695 households were randomly assigned to receive transfers averaging about $500 per month over a two year period, with 1,402 households randomly assigned to a control group. To measure the impact of transfer frequency, half of the recipients were paid twice per month and the other half received quarterly transfers. We surveyed 1,074 respondents 18 months after the beginning of transfers. Receiving guaranteed income had no impact on the labor supply of full-time workers, but part-time workers (at baseline) had lower labor market participation by 13 percentage points. Income (excluding the transfer) was reduced by $333 per month on average relative to control households, and expenditures were reduced by $302 per month. At the same time, average non-housing debt balances declined by $2,190 over 18 months relative to the control group, although the drop is not statistically significant. We find a significant improvement in housing security, but no overall effects on indices of psychological and financial well-being. The recipients of twice-monthly transfers were more likely to own a car, had lower credit card debt and greater food security than recipients of quarterly transfers, but otherwise transfer frequency had little impact. Compared to male recipients, female recipients reported a greater increase in financial security, and a smaller reduction in earned income and expenditures.

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