The Largest Study Ever on UBI Was Just Conducted—The Results Are Disappointing for Advocates - FEE
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Researchers Eva Vivalt, Elizabeth Rhodes, Alexander W. Bartik, David E. Broockman, and Sarah Miller’s working paper, titled “The Employment Effects of a Guaranteed Income: Experimental Evidence from Two U.S. States,” was recently put out by the National Bureau of Economic Research (NBER).
The study “leverag[ed] an experiment in which 1,000 low-income individuals were randomized into receiving $1,000 per month unconditionally for three years.” What were the results?
First, it made the recipients poorer: “Overall, the transfers led to a reduction in annual total individual income of about $1,500 in our main survey measure, compared to the control group.” Why? Well, people worked less (1.3 hours per week less) and stayed unemployed for longer! Not only do the recipients work less; this happened to other adult members of the household as well.
Unemployment duration “increased by 1.1 months” for recipients.
But did people use this time to find a better job? It doesn’t seem like it. Recipients appear to be more selective in their applications, but the authors say, based on their survey measurements, “We do not see much in the way of differences in the types of jobs participants applied for,” and “the results do not support any changes in quality of employment.”
Were people doing other productive things in unemployment, though? The results are unimpressive
The authors examine whether the receipt of basic income increases entrepreneurship. While they find people claiming to have more entrepreneurial intention, this does not translate into actual entrepreneurial activity
What about education? Do people go back to school? Mostly no. The authors say, “By and large, we do not observe significantly improved education outcomes in our sample, though there are some indicators of minor improvements.”
So what did people do with the extra time they got from working less?
In short, the answer is, they relaxed.
In concluding the results of the paper, the authors say, “[P]articipants in our study reduced their labor supply because they placed a high value, at the margin, on additional leisure.”