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Reuters/USCG/Grant DeVuyst
Citizen assets.

When you give Alaskans a universal basic income, they still keep working

By Michael J. Coren

A universal basic income (UBI) is at the heart of the debate about how society will organize itself after robots and algorithms do more and more of today’s work. Not everyone agrees how we do this.

One side argues, with some evidence, that giving all citizens a minimum stipend that covers basic needs discourages punching our time cards. Jobs also give us more than just money, they offer purpose and social cohesion.

The other argues this model has us all wrong: Humans desire meaningful work, and a basic income allows them to pursue it through better education, time and flexibility that ultimately benefits society.

A working paper published this month with the National Bureau of Economic Research begins to answer these issues with empirical data. Earlier studies analyzing lottery winners and negative tax experiments in the 1970s found for every 10% increase in unearned income, earned income seemed to fall by about 1%. Those experiments suggested payments created a slight disincentive to work (although those studies suffered from small sample sizes and short time frames, usually three to five years, compared to the universal, long-term coverage envisioned in a UBI).

The study examining the Alaska Permanent Fund calls this into question. The $60.1-billion state fund, established in 1976, collects revenue from Alaska’s oil and mineral leases to fund an annual stipend to Alaskans. Since 1982, the fund has sent a dividend check to every Alaskan resident. In recent years,  its been up to $2,072 per person, or $8,288 for a family of four (it was reduced in 2016 amid a budget crisis).

Alaska’s system set up an ideal experiment. Researchers from the University of Chicago and the University of Pennsylvania compared residents’ behavior before and after the dividend to decide what effect the payments had on workforce participation.

They found that full-time employment did not change at all, and the share of Alaskans who worked part-time jobs increased by 17%.

“Given prior findings on the magnitude of the income effect, it is somewhat surprising for an unconditional cash transfer not to decrease employment,” the paper states.

The authors theorize employment remained steady because the extra income that allowed people to buy more also increased demand for service jobs, a finding consistent with the economic data of the time. (There was no effect seen when it came to jobs, such as those in manufacturing, that produce exports.) Essentially, the authors argue, macro-economic effects of higher spending supported overall employment.

The fund has won over skeptical Alaskans. The Economic Security Project (ESP), a group backing efforts to collect data on unconditional cash stipends, recently commissioned a survey of 1,004 Alaskan voters to see how they felt about the Alaska Permanent Fund. Public support for the program has deepened in the past generation, despite the prospect of raising taxes.

Elsewhere, UBI studies are ongoing. After lying dormant for several decades, basic income research has experienced a resurgence. With advances in artificial intelligence and automation looming, Silicon Valley types, as well as countries such as Finland, are funding an assortment of pilots and studies.

The most recent paper is not the final word: The Alaskan dividends are not a full UBI (they don’t cover minimal living expenses). Contexts differ from country to country, and within regions of countries. The dozen or so experiments now being run around the world will soon shed more light on the question.