What do we already know about cash transfers?
There are existing studies of U.S. and Canadian negative income tax experiments, the Alaska Permanent Fund Dividend (PFD), and the Eastern Band of Cherokees (EBC) casino dividend program, among others.
Overall effects depend on program design, but there is little evidence of an effect on labor force participation, while there are significant increases in quality-of-life outcomes like mental and physical health, educational outcomes, parenting, and criminal activity.
Effects on Work
Existing studies suggest the average worker will not drop out of the labor market when receiving a cash transfer. Some reduce their hours worked.
Research on the Alaska Permanent Fund Dividend (PFD) and work show somewhat conflicting results but all small in magnitude. See here and here. Results are summarized here.
Effects on Inequality and Poverty
PFD payments substantially reduce poverty among rural Alaska Natives, and there is evidence it reduces income inequality in the short- and long-terms.
Effects on Education
Some studies suggest school attendance and educational attainment are boosted by cash transfer programs, especially for younger and poorer children.
Eastern Cherokee children whose families got casino payments stayed in school longer.
Effects on Health
There is evidence that income tax experiments lead to improvements in nutrition, perhaps because of increased spending on fresh “non-durable” foods.
In Canada, cash transfer recipients experienced reductions in hospitalizations, especially for mental health, accidents, and injuries.
Native American recipients of casino dividends show an improvement in mental health. In adulthood, children who had received benefits were less likely to experience alcohol or cannabis dependence.
In contexts with universal healthcare, such as Sweden, there appear to be no effects on health outcomes.
Payments from Alaska’s Permanent Fund Dividend (PFD) were associated with a reduction in childhood obesity. For three-year-olds, there is a strong evidence that PFD reduces obesity.
Effects on Families
Evidence from Gary, IN suggests fertility rates decrease and birth weights increase following a cash transfer.
Similar results from Alaska’s Permanent Dividend Fund suggest modest but positive effects on birth weight.
Children report more positive interactions with parents among casino dividend recipients.
Some analyses of Income Maintenance Experiments from the 1970s (IMEs) suggest an increase in divorces, though these results have been strongly disputed. Casino dividend programs showed no effect on household status or marital status.
Analysis of the Canadian Manitoba Basic Annual Income Experiment, or “Mincome,” suggested a reduction in inter-partner violence.
Effects on Crime
Self-reported criminal activity decreased among recipients of the Eastern Band of Cherokee casino dividend.
Canada’s Manitoba Basic Annual Income Experiment, or “Mincome,” showed a reduction in both violent crime and total crime.
- One study of Alaska’s Permanent Fund Dividend found immediate increases in substance-abuse incidents after payment but a reduction in property crime and no effect on violent crime.