Labor supply effects of a universal cash transfer

24 August 2021

Unconditional cash transfers in the form of a universal basic income, a universal basic pension or a universal child benefit are increasingly being discussed in many countries. In this article, I investigate the labor supply effects of the introduction of a large unconditional cash benefit. I exploit the unique design of the child benefit program in Poland to identify the pure income effect of the monthly transfer. I find very small labor supply effects on both the intensive and extensive margin. Additional evidence shows that instead of extending their free time, households receiving the benefit substantially increased their consumption and savings.

keywords: unconditional cash transfer, universal basic income, income elasticity, labor supply, child benefit, difference-in-differences
JEL codes: 
publication year: 2021
language: english
Publications category:  , ,
publishing series: IBS Working Paper
publication number: 02/2021
ISSN: 2451-4373

Institute for Structural Research (IBS), Warsaw School of Economics (SGH), IZA (Bonn, Germany).

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