What is the impact of a basic income on employment?

Basic

Ṁ139

resolved Jun 6

35%25%

Between 3% and 10% increase

35%31%

Between 3% decrease and 3% increase

13%9%

>10% (increase)

10%7%

Between 10% and 3% decrease

6%4%

Over 10% decrease

20%Other

A subsidy to landlords unless paired with a land value tax

What is the estimated change in employment (measured as time worked) of people granted a basic income? I will leave the parameters of what exactly counts as a basic income intentionally open, but I'm roughly thinking of long-term, unconditional cash transfers with an amount roughly the poverty line. I'll take a global view including both high and low income countries. It does not necessarily have to be universal. (If you think any of these factors would make a big difference to this question, please comment!) A basic income program may replace some existing government programs and may also require added taxes to fund it, in which case this question is about the net effect of the changes implemented. I will split the range of possible answers into buckets, and resolve to one of those (not any other answers). I will resolve based on some combination of studies discussed here and market consensus. Here are some studies to start off with: Finland 2-year pilot study found a very small increase in employment. See https://www.mckinsey.com/industries/public-and-social-sector/our-insights/an-experiment-to-inform-universal-basic-income or https://www.kela.fi/web/en/news-archive/-/asset_publisher/lN08GY2nIrZo/content/results-of-the-basic-income-experiment-small-employment-effects-better-perceived-economic-security-and-mental-wellbeing. The number I could find was 0.8% increase from a preliminary version of the report (so far I couldn't find an English version of the final report). This study replaced some existing benefits, including unemployment insurance, with the unconditional cash transfer. So to me it's not at all surprising that it would find a slight increase in employment - it effectively decreased the recipients' marginal tax rates. In fact, some consider the study a "failure" because it didn't find a larger inrease in employment - but this is attributed largely to limitations of the study design. Either way, it's clear that this pilot did not find a decrease in employment. "The effects of cash transfers on adult labor market outcomes" https://izajodm.springeropen.com/articles/10.1186/s40176-018-0131-9 - this meta-review found that unconditional cash transfers resulted in little to no change in labor. Some of the studies it looks at found various impacts mostly in the single-digit percents, both positive and negative. I'm picking very wide buckets here because based on an initial glance at some studies I doubt we'll have a very precise resolution. Related: https://manifold.markets/ManifoldMarkets/universal-basic-income-should-exist May 22, 10:15am: I will resolve PROB with an attempt at the distribution of outcomes found in studies. That is, the distribution of average findings across many different studies. Close date updated to 2022-06-05 11:59 pm

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Resolved based on the rough distribution of outcomes from the various meta-reviews and studies listed in my spreadsheet. Worth noting that the majority of the studies are short-term programs, there is only a little empirical data on permanent cash transfer/basic income programs, but the meta-reviews still think they are useful to draw some inferences about UBI.

I went through some studies and did a quick classification of the findings on employment impact: https://docs.google.com/spreadsheets/d/1otohzwWzDAJxyzRamn0cp6ZiXq5wX15bn6KU0DUTvvo/edit#gid=0 Note that many of these are targeted programs, some specifically designed to increase employment. E.g. replacing unemployment insurance with unconditional cash transfers with the intent of increasing employment incentives. So it definitely makes sense that many programs increase employment - and I think a well-designed UBI can have similar benefits (e.g. increasing employment incentives by reducing effective marginal tax rate).

Another thought: Many studies find that many recipients of cash transfers spend more time caring for family (child care, elder care, etc), which I think is functionally a type of employment - it's work that produces value to society and that you'd otherwise have to pay someone else to do, but no cash is changing hands so it doesn't get counted as income. (It seems hard to accurately measure this impact so I won't try to adjust for it in the market resolution unless there's some studies with reasonable analysis of it.)

You don't find a decrease in employment with a two year study because people know they will have to go back to earning money after the two years are over. Even five years wouldn't be enough to get me to quit, but a permanent institution would. So these studies are very weak evidence.

@DavidBolin Yeah, I do agree that temporary cash transfers are weak evidence about long-term basic incomes, but I think they give some insight. Many studies do find some impact (some increases, some decreases) even from a program of say 2 years. I think there are also a handful of studies on permanent tax changes (I haven't researched them much yet).

Some more studies I found: Is There Empirical Evidence on How the Implementation of a Universal Basic Income (UBI) Affects Labour Supply? A Systematic Review https://mdpi-res.com/d_attachment/sustainability/sustainability-12-09459/article_deploy/sustainability-12-09459-v2.pdf?version=1605770561 "Despite a detailed search, we have not found any evidence of a significant reduction in labour supply. Instead, we found evidence that labour supply increases globally among adults, men and women, young and old, and the existence of some insignificant and functional reductions to the system such as a decrease in workers from the following categories: Children, the elderly, the sick, those with disabilities, women with young children to look after, or young people who continued studying. These reductions do not reduce the overall supply since it is largely offset by increased supply from other members of the community." On "Cash transfers: what does the evidence say?" https://odi.org/en/publications/cash-transfers-what-does-the-evidence-say-a-rigorous-review-of-impacts-and-the-role-of-design-and-implementation-features/ "This review, which combines 11 systematic reviews, found that it increases the probability that an adult works and increases the number of hours worked per week; in addition to other beneficial effects for individuals and households in relation to poverty, education, health, savings, investment, self-employment, and the vital autonomy or empowerment of women. Although it found insignificant effects in just over half of the studies, the majority of the studies showed positive effects (in participation and intensity) on employment." The public health effects of interventions similar to basic income: a scoping review https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30005-0/fulltext "Employment effects were inconsistent, although mostly small for men and larger for women with young children." 4 US Negative Income Tax experiments resulted in -5% change in annual hours of work for male heads of households and -21% change for second earners.

@jack this is clearly the correct answer

@EnopoletusHarding Could you explain why?

@LarsDoucet I'm curious about this claim, why do landlords collect more under a basic income? Also as noted in the resolution rules, this option won't be chosen for resolution, but happy to have it as a discussion thread.

I do think land value tax is a good policy, but as far as I know it seems largely orthogonal to basic income?

@jack it’s a natural consequence of ricardo’s law of rent. If a UBI is in place it is equivalent to giving everyone in that area a raise, and landlord have the leverage to raise rents in line with increases in the prevailing average wage of the area.

@LarsDoucet Ok, if the average income goes up then rents go up, that I agree with. But if we consider where the funding from the UBI is coming from, it's got to reduce some group's income, and average income should end up being about the same. If the UBI is funded by progressive tax increases i.e. redistribution, then wealthier people have less income and that seems like the effect on rent on average would cancel out - maybe rents would tend to go up in poorer areas and down in richer areas. If it's funded by replacing existing government transfer programs, then there also shouldn't really be a change to average income. If the UBI is funded by a LVT, that means landlords have less income and that also factors into the average income ending up the same I guess.

@jack So to be clear I’m in favor of UBI, it’s just a question of how do you fund it, and how do you keep wage inflation from just driving rent inflation. I think the devil’s kind of in the details here. I would like to dig more into the studies here and see more widespread pilots, I’m just basically registering this as my basic prediction. The reason I think UBI + LVT go well together is the latter is an ideal funding source, and it’s been empirically demonstrated that LVT can’t be passed on to tenants.

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