Basic Income and the UK labour supply

Click here to read Basic Income and the UK Labour Supply- Michael Story 2013

Michael Story summarises his dissertation:

While various income scheme experiments in the developing world have increased labour supply mainly due to increased nutrition, access to healthcare and incentives from local stimulus, critics of such proposals argue that in a developed country such as the UK with healthcare free at point of need and an existing benefits system which has almost totally eliminated caloric deficits, a Basic Income scheme would negatively affect labour supply with socially costly consequences.

This paper examines this argument, then reviews the evidence for and against this hypothesis, drawing on income scheme experiments, psychological literature and a number of studies of comparable recipients of unconditional incomes such as state pensioners and lottery winners, and concludes that there is some evidence of a likely reduction in labour market participation at least in the short run, particularly among secondary earners in households, but when compared to other factors affecting participation and employment rates it is small, and the consequences for well-being and other outcomes are positive rather than costly. This conclusion is considered in the context of a changing labour market and goals of social security policies.