Study on universal basic income finds Alaska’s PFD has ‘no effect on employment’

As interest in the concept of a universal basic income grows around the world, two researchers have authored a paper looking at whether Alaska's Permanent Fund dividend decreases employment.

The answer? It doesn't.

The study, released this month by researchers from the University of Chicago and the University of Pennsylvania, concludes that the PFD had "no effect on employment" overall in the state (although it did increase part-time work by 17 percent). That's in contrast to the theory "that individual cash transfers decrease household labor supply," the study said.

The researchers examined Alaska's PFD to better understand what the overall impact of a universal basic income would be on the labor market beyond Alaska.

"Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment," said the study, by Damon Jones in Chicago and Ioana Marinescu in Pennsylvania.

Some places, including Finland and the Canadian province of Ontario, are testing the concept of a universal basic income. Hillary Clinton even considered making the concept part of her platform in the 2016 U.S. presidential election, under the moniker "Alaska for America." When billionaire and Facebook co-founder Mark Zuckerberg visited Alaska last year, he also mentioned the PFD as "a form of basic income."

[UAA research shows impact of PFD on poverty rate in Alaska]

Little is known about the overall economic impact of such a policy, the study said.

"A key concern with a universal basic income is that it could discourage people from working," Jones told a University of Chicago news blog, "but our research shows that the possible reductions in employment seem to be offset by increases in spending that in turn increase the demand for more workers."

Alaska's PFD is considered a universal income because there are few requirements for residents to get it, said Brett Jordan, a researcher at the University of Alaska Anchorage Institute of Social and Economic Research. Started in 1982, the PFD distributes money to residents from the state's $64 billion oil wealth fund.

Whether the PFD qualifies as "basic" income is a more complicated question, Jordan said, because there are various definitions of what the threshold for basic income is.

"Their theory that they're putting out there is, there are kind of two effects when you distribute cash, like the dividend, to everybody," Jordan said. "Everybody is getting personally wealthier which means maybe I have to work a little bit less to receive the same level of income, but at the same time, all these retail outlets are getting a lot busier, so maybe my boss is calling me if I work in a place like that, saying, 'Hey, can you do some (more) work, there's a PFD sale this weekend.' "

[Can the Permanent Fund save Alaska's budget, without taxes? The Senate says so — but it depends.]

The PFD is also "surprisingly under-studied," Jordan said. ISER is working on a cluster of new studies on the subject.

Past work from the University of Alaska Anchorage has shown that income from the dividend lifts 15,000 to 25,000 Alaskans above the poverty line each year, with an outsized effect in rural parts of the state.