MIP network member Damon Jones sat down with HCEO to talk about his research on tax policy, and in particular a project looking at the effects of universal basic income using data from a cash transfer program in Alaska.
"There's been a lot of interest, increasingly so, on the idea of universal basic income," Jones says. "I think in part because of growing inequality and some other structural trends in the economy."
Universal basic income (UBI) programs provide all citizens of a geographic area with a certain sum of money regardless of income. Jones notes that data on previous or existing UBI programs is scarce, so it has been a challenge to evaluate the effects on employment, household decision-making, or potential benefits for citizens.
"What we wanted to do is to learn a little bit more about what happens with a universal cash transfer, when everyone is getting paid at the same time in a given geographic area," he says.
He and his co-author, Ioana Marinescu, looked at the Permanent Fund Dividend in Alaska, which is an annual transfer to all residents. The sum is comparable to what some families might receive as an Earned Income Tax Credit. Jones and Marinescu were interested in the labor market effects of the program, and compared Alaskan data to a set of similar states both before and after the Permanent Fund Dividend was introduced.
"What we found was, in terms of working or not working, we didn’t see any significant impact on exiting the labor force," Jones says. "Even though it's not as big as the universal basic income that people have in mind, we do think there are some things to learn from that example that might translate. In particular, we know that when people win the lottery, they are likely to scale back their work. We didn’t find as much evidence on that."
Jones is Assistant Professor at the University of Chicago's Harris School of Public Policy.