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

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  • Chris Riddell
  • W. Craig Riddell

Abstract

The income maintenance experiments have received renewed attention due to growing international interest in a basic income. Proponents of a negative income tax (NIT) viewed it as a replacement for traditional welfare with stronger work incentives. However, existing labor supply estimates for single mothers (those eligible for welfare) are uniformly negative. We reassess the experimental evidence and find randomization failure in two NITs (Gary and Seattle). In Denver and Manitoba, we find positive labor supply responses for those on welfare before random assignment. Our results provide strong evidence that an NIT can increase work activity among single mothers on welfare.

Suggested Citation

  • Chris Riddell & W. Craig Riddell, 2024. "Welfare versus Work under a Negative Income Tax: Evidence from the Gary, Seattle, Denver, and Manitoba Income Maintenance Experiments," Journal of Labor Economics, University of Chicago Press, vol. 42(2), pages 427-467.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/723706
    DOI: 10.1086/723706
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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

    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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