Damon Jones, Ioana Marinescu

What are the effects of universal and permanent cash transfers on the labor market? Since 1982, all Alaskan residents have been entitled to a yearly cash dividend from the Alaska Permanent Fund. Using data from the Current Population Survey and a synthetic control method, we show that the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent). Although theory and prior empirical research suggests that individual cash transfers decrease household labor supply, we interpret our results as evidence that general equilibrium effects of widespread and permanent transfers tend to offset this effect, at least on the extensive margin. Consistent with this story, we show suggestive evidence that tradable sectors experience employment reductions, while non-tradable sectors do not. Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment.

JEL Codes  
H24: Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
I38: Welfare and Poverty: Government Programs; Provision and Effects of Welfare Programs
J21: Labor Force and Employment, Size, and Structure
J22: Time Allocation and Labor Supply
unconditional cash transfers
universal basic income
Labor Supply