Study: Guaranteed income makes recipients less likely to seek more or improved work
Image by Rawpixel
Are guaranteed basic income programs really effective if recipients don't pursue financial independence through better job opportunities? But that's what a 2019 study found: Labor market effects were almost nonexistent, as sprinkling moolah didn't lead to more active workplace participation (and really, besides Ellenberg/Cortese, who's surprised?). From San Diego's Bull Oak Capital.
The Finnish study is the most recent and thorough case study on the topic and, as such, should be relied upon as the go-to data.
Participants in this study received 560 euros ($600) per month from 2017 to 2018. Those included were part of a randomly selected group of 2,000 jobless people between the ages of 25 and 58. The funds they received included no strings attached.
The study’s original aim was to examine how the social security system could be reshaped to promote active employment participation by giving people a stronger incentive to work. In short, would giving unemployed individuals a basic income increase the national employment rate?
The answer is no. The landmark trial concluded that Universal Basic Income would bring happiness, but it would not boost the job market.
The basic income improved the mental well-being of recipients, making them feel more secure with their finances. However, it did not show that it would activate people at the lower ranks of society to seek self-reliance.
“In simple terms, the idea was to test if the carrot works better than the stick in encouraging the unemployed to accept new job offers and to seek income from entrepreneurial activities. With that respect, the results were disappointing. Basic income recipients did not have more workdays or higher incomes than those in the control group. Despite the fact that basic income recipients had clearly better incentives to work, there were no statistically significant differences between the groups. The results show that among the young and the long-term unemployed other obstacles for work, such as outdated skills and health issues, are more important than financial incentives.” (Source: University of Helsinki)
This article originally appeared in Bull Oak Capital. Read the whole thing here.
Related:
Follow Opportunity Now on Twitter @svopportunity
Opp Now enthusiastically welcomes smart, thoughtful, fair-minded, well-written comments from our readers. But be advised: we have zero interest in posting rants, ad hominems, poorly-argued screeds, transparently partisan yack, or the hateful name-calling often seen on other local websites. So if you've got a great idea that will add to the conversation, please send it in. If you're trolling or shilling for a candidate or initiative, forget it.