permanent fund

An increase of $1,000 in the Alaska Permanent Fund Dividend (PFD) affects women in the labor market differently than men, with women working fewer hours and men having increased employment opportunities in the three months after the PFD is distributed. The differing responses, however, nearly balance each other out with a relatively small decline in the number of hours worked on an annual basis, according to a new paper by ISER’s Andrew Bibler, Mouhcine Guettabi, and Matthew Reimer. 

Mouhcine Guettabi provided an economic overview and answered questions concerning the impact of the governor's proposed budget to members of the Alaska State Senate and House Finance Committees on Thursday, March 7. 

Mouhcine's presentation, Budget options: What are the short term effects?, is available for download.

Within the first few weeks after the Alaska Permanent Fund Dividend (PFD) is paid, substance-abuse incidents increase, while property crime decreases. On an annual basis, however, changes in criminal activity associated with the payment are small and estimated costs are a small portion of the total payment, according to a new analysis of the PFD by Brett Watson, Mouhcine Guettabi, and Matthew Reimer of the Institute of Social and Economic Research (ISER). 

In 2017, job losses in Alaska's ongoing recession spread from the sectors first affected—primarily oil and gas and state government—to the sectors that depend on household spending, including retail trade, accommodation and food services, and leisure and hospitality. Alaska will continue losing jobs in 2018, but at a slower pace— likely in the range of 0.7%. That slower pace isn't a sign of recovery, but rather an indication that the initial shock of low oil prices has made its way through the economy.

These are among the findings of a new overview of Alaska's economic and fiscal conditions, by Mouhcine Guettabi, assistant professor of economics at ISER. He also estimates that the the fiscal uncertainty caused by the state's current lack of a plan for dealing with its huge budget deficit may be reducing capital investment in Alaska by something on the order of $200 million to $600 million a year. The overview also considers the effects of different rates of withdrawal from the Permanent Fund earnings reserve, should the legislature decide to use some of those earnings to pay for government operations.

Download the report, What Do We Know to Date about the Alaska Recession and the Fiscal Crunch? By Mouhcine Guettabi, with support from Northrim Bank. If you have questions, get in touch with the author at mguettabi@alaska.edu or 907-786-5496.

Permanent Fund dividends—payments the state makes to virtually all residents annually—lifted about 25,000 Alaskans out of poverty in 2015, reducing poverty in Alaska by about a third. Since 1990, PFDs have reduced poverty rates in Alaska by an estimated 2.5 to 4 percentage points annually. They have been particularly important for children, Alaska Natives, and rural residents, who are much more likely to be poor than Alaskans on average.

Those are estimates that Matthew Berman, a professor of economics at ISER, and Random Reamey, an ISER research professional, developed for their analysis of how PFDs have reduced poverty in Alaska over the past 25 years. They made their own estimates, because they discovered that the U.S. census data federal agencies use to calculate poverty rates for Alaska don't include all PFD income. So they adjusted census data to include all PFD income, and then estimated poverty rates with and without PFDs.

Download the summary (PDF, 955KB) or the full analysis (PDF, 994KB). If you have questions, call Matthew Berman at 907-786-5426.

The state government's assets could generate enough earnings in fiscal year 2016 to pay the Permanent Fund dividend, boost the size of the Permanent Fund, and cut the expected General Fund deficit from $3.3 billion to just over $1 billion—which would still be a big fiscal challenge but much more manageable. That's the finding of a new analysis by Scott Goldsmith, professor emeritus of economics at ISER.

Those state assets consist of money in the Permanent Fund and other accounts as well as the value of state-owned petroleum still in the ground. Dr. Goldsmith estimates that after first paying the dividend and adding to the Permanent Fund, the state could put $2.2 billion in remaining earnings in the General Fund, which pays for public services. Right now the state uses only current petroleum revenues and smaller sources to cover General Fund spending—but those revenues are expected to fall $3.3 billion short of the estimated $5.5 billion in spending next year.

Read the analysis, The Path to a Fiscal Future: Use Earnings from All our Assets (PDF, 661.6KB). If you have questions, get in touch with Scott Goldsmith at osgoldsmith@alaska.edu or call 907-786-7720.

ISER publications are solely the work of individual authors and should be attributed to them, not to ISER, the University of Alaska Anchorage, or the research sponsors.