Would a Basic Income Guarantee Reduce the Motivation to Work? An Analysis of Labor Responses in 16 Trial Programs (original) (raw)

Basic Income and the Motivation to Work.docx

In response to concerns that new technologies such as robotics and artificial intelligence will have a detrimental impact on jobs and wages for human workers, a growing number of policy analysts have called for consideration of a Basic Income Guarantee (BIG), which involves a tax-free, subsistence-level, income paid directly by a government to individuals or households with few or no conditions. While many opponents of BIG programs believe that receiving guaranteed subsistence income would act as a strong disincentive to work, various areas of empirical research in psychology (studies of intrinsic motivation; non-pecuniary benefits of work on social identity and purpose; and reactions to financial windfalls such as lottery winnings) suggest that a BIG would not lead to meaningful reductions in work. To test these competing predictions, a comprehensive review of BIG outcome studies reporting data on adult labor responses was conducted. The results indicate that 93% of reported outcomes support the prediction of no meaningful work reductions when the criterion for support is set at less than a 5% decrease in either average hours worked per week or the rate of labor participation. Overall, these results indicate that adult labor responses would show no substantial impact following a BIG intervention.

The work response to a guaranteed income: A survey of experimental evidence

Conference Series;[Proceedings], 1986

The work response to a guaranteed income: a survey of experimental evidence. Author info | Abstract | Publisher info | Download info | Related research | Statistics. Author Info. Gary Burtless Additional information is available for the following registered author(s): Gary Burtless. ...

When financial work incentives pay for themselves: evidence from a randomized social experiment for welfare recipients

Journal of Public Economics, 2005

This paper summarizes early findings from a social experiment that provided financial incentives for new welfare recipients to leave welfare and work full time. The financial incentive was essentially a negative income tax with a requirement that people work at least 30 h/week. Early results show that the financial incentive increased full-time employment, earnings, and income, and reduced poverty. Furthermore, at the end of the period discussed in this paper, the program was paying for itself through increased tax revenues. D 2004 Published by Elsevier B.V. JEL classification: I38

Financial Incentives for Increasing Work and Income Among Low-Income Families

1999

This paper investigates the impact of financial incentive programs, which have become an increasingly common component of welfare programs. We review experimental evidence from several such programs. Financial incentive programs appear to increase work and raise income (lower poverty), but cost somewhat more than alternative welfare programs. In particular, windfall beneficiaries --those who would have been working anyway --can raise costs by participating in the program. Several existing programs limit this effect by targeting long-term welfare recipients or by limiting benefits to full-time workers. At the same time, because financial incentive programs transfer support to working low-income families, the increase in costs due to windfall beneficiaries makes these programs more effective at alleviating poverty and raising incomes. Evidence also indicates that combining financial incentive programs with job search and job support services can increase both employment and income gains. Nonexperimental evidence from the Earned Income Tax Credit (EITC) and from state Temporary Assistance to Needy Families (TANF) programs with enhanced earnings disregards also suggests that these programs increase employment, and this evidence is consistent with the experimental evidence on the impact of financial incentive programs.

Basic income and a public job offer: complementary policies to reduce poverty and unemployment

The Journal of Poverty and Social Justice, 2018

Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Policy Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.

An unconditional basic income and labor supply: Results from a pilot study of lottery winners

The Journal of Socio-Economics, 2008

Proponents of an unconditional basic income see its introduction as the most desirable way to redesign existing labor markets, arguing that its effects on labor supply might engender full employment. Opponents, on the other hand, argue that an unconditional basic income would result in an economic crisis due to a severe reduction in labor supply. So far no empirical data were available to assess these claims. This article proposes an empirical research strategy, i.e. surveying specific types of lottery winners, to investigate the empirical consequences of introducing an unconditional basic income. The results of a pilot survey are presented.

Are Two Carrots Better Than One? The Effects of Adding Employment Services to Financial Incentive Programs for Welfare Recipients

ILR Review

The Self-Sufficiency Project (SSP) was a social experiment conducted in two Canadian provinces during the 1990s that tested a generous financial incentive program for welfare recipients. A little-known subsidiary experiment, called SSP Plus, had a three-way design that tested the incremental effect of adding employment services to the generous financial incentive program. Employment services are viewed by many welfare analysts as an important component of an overall strategy for helping welfare recipients escape poverty and achieve stable employment. This paper presents the results of the SSP Plus experiment. Adding employment services encouraged more people to take up the earnings supplement, and it appeared to have long-term effects on full-time employment and welfare receipt. This might be because the services improved the jobs people obtained. Compared to program participants who lacked the added services, SSP Plus members had higher earnings and wage rates, and also appear to h...

Behavioral Economics and the Basic Income Guarantee

Basic Income Studies, 2010

This article provides a critical discussion of the potential contributions behavioral economics makes to the idea of a Basic Income Guarantee (BIG). Behavioral economics suggests that the consequences of a basic income may be significantly different from the ones predicted by the Standard Economic Model. Three topics from this literature are analyzed and linked to the BIG idea: Prospect Theory, Motivation Crowding Theory, and Conspicuous Consumption. The article argues that a basic income may be efficiency enhancing under some conditions, but at the same time incentives related to positional concerns may increase wasteful expenditure following its implementation.