The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund

Abstract

Since 1982, all Alaskan residents have received a yearly cash dividend from the Alaska Permanent Fund. Using the Current Population Survey and a synthetic control method, this paper shows that the dividend had no effect on employment and increased part-time work by 1.8 percentage points (17 percent). A calibration of microeconomic and macroeconomic effects suggests that the empirical results are consistent with cash stimulating the local economy—a general equilibrium effect. Nontradable sectors have a more positive employment response than tradable sectors. Overall, the results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment. (JEL E24, H24, H75, I38, J22, R23)