New research from the University of Chicago Harris School of Public Policy suggests that a universal basic income would not cause people to leave the workforce.
Such proposals, including one considered by Hillary Clinton during her 2016 presidential campaign, include direct payments that ensure each resident has a baseline of income to provide for basic needs. While previous research has focused on the effects of these unconditional cash transfers at the micro level—for example, winning the lottery— this study examined their large-scale impact by looking a government program that has supported Alaska residents for the past 25 years.
In a working paper released Feb. 12 by the National Bureau of Economic Research, Assoc. Prof. Damon Jones of Harris Public Policy and Asst. Prof. Ioana Marinescu of the University of Pennsylvania School of Social Policy and Practice (formerly of UChicago) examined the effect of unconditional cash transfers on labor markets using the Alaska Permanent Fund Dividend—a payout from a diversified portfolio of invested oil reserve royalties, established in 1982. They concluded unconditional cash transfers had no significant effect on employment, yet it increased part-time work.
"It is reasonable to expect an unconditional cash transfer, such as a universal income, to decrease employment," Jones said. "A key concern with a universal basic income is that it could discourage people from working, but our research shows that the possible reductions in employment seem to be offset by increases in spending that in turn increase the demand for more workers."
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