Universal basic income: Giving people money does not make them lazy, Alaska study finds

The potentially revolutionary idea of universal basic income – a form of social security where citizens of a country receive a regular and unconditional sum of money from the government to cover their basic needs – has been the subject of an increasing number of research papers in recent years.

Its supporters say it could bring an end to poverty while simultaneously enhancing people's freedom, by providing them with financial stability. However, one of the main concerns of its critics is that employment will fall once citizens' basic needs are met, in addition to other drawbacks.

Now, a new study conducted by researchers from the University of Chicago, has suggested that a universal basic income will not cause people to leave the workforce.

The research examined the impact of a US government programme, known as the Alaska Permanent Fund Dividend, which has been running in the state for the past 25 years. The initiative hands out unconditional payments from a portfolio of oil reserve royalties worth around $61bn.

Every Alaskan who has been a resident for at least 12 months, with a few exceptions, is entitled to a dividend from the Fund. On average, eligible Alaskans have received around $2,000 a year in a lump sum paid by direct deposit.

The researchers found that these unconditional cash transfers had no significant effect on employment, and actually increased the numbers in part-time work by 17%.

"It is reasonable to expect an unconditional cash transfer, such as a universal income, to decrease employment," said Damon Jones from Harris Public Policy. "A key concern with a universal basic income is that it could discourage people from working, but our research shows that the possible reductions in employment seem to be offset by increases in spending that in turn increase the demand for more workers."

However, the researchers say that more studies need to be conducted in order to analyse different universal basic income proposals, including the effects of proposed funding models and possible impacts on the prices of local goods.