ISER Publication - Universal Cash Transfers and Labor Market Outcomes
One major criticism of universal basic income 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, document important heterogeneity across workers, and provide a set of placebo tests supporting our main results. Altogether, a $1,000 increase in the per-person disbursement leads to a 0.2% labor market contraction on an annual basis.
Bibler, Andrew and Guettabi, Mouhcine and Reimer, Matthew N, Universal Cash Transfers and Labor Market Outcomes (March 21, 2019). Available at SSRN: https://ssrn.com/abstract=3357230 or http://dx.doi.org/10.2139/ssrn.3357230