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Welfare versus Work under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments

Author

Listed:
  • Riddell, Chris

    (University of Waterloo)

  • Riddell, W. Craig

    (University of British Columbia, Vancouver)

Abstract

The Income Maintenance Experiments have received renewed attention due to growing international interest in a Basic Income. Proponents viewed a Negative Income Tax as a replacement for traditional welfare with stronger work incentives and reduced poverty. However, existing labor supply estimates for single parents are uniformly negative. We re-assess the experimental evidence and find randomization failure in two NITs (Gary and Seattle). In Denver and Manitoba, we find a positive labor supply response for those on welfare prior to random assignment. Our results provide strong evidence that a NIT can increase work activity among single parents on welfare.

Suggested Citation

  • Riddell, Chris & Riddell, W. Craig, 2021. "Welfare versus Work under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments," IZA Discussion Papers 14585, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14585
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    2. Koebel, Kourtney & Pohler, Dionne, 2024. "The effect of an unconditional government income transfer on the labour supply of lowincome workers," CLEF Working Paper Series 76, Canadian Labour Economics Forum (CLEF), University of Waterloo.

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    More about this item

    Keywords

    negative income tax; welfare; income maintenance experiments; labour supply;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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