Labour supply reactions to basic income: Insights from 60 years of research

Abstract

Abstract Basic income (BI) has lately re-emerged as a topic of debate, without having lost its explosiveness and contentiousness. Of particular interest in this debate is the labour supply effect of a BI, which holds significant implications for its societal desirability, economic sustainability and political feasibility. To shed light on this issue and facilitate more informed policy discussions, this article delves into six decades of research, encompassing negative income tax and BI experiments, lottery studies and unconditional cash transfers (UCTs). In an effort to advance existing knowledge, we not only review the labour supply outcomes of existing studies but also systematically examine their design features, implementation characteristics and analyses. Our examination reveals the presence of significant methodological shortcomings in much of the empirical research. Great caution is thus advised when making broader inferences about the impacts of a BI.