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Basic Income and Labor Supply: Evidence from an RCT in Germany

Author

Listed:
  • Bernhard, Sarah

    (IAB Nürnberg)

  • Bohmann, Sandra

    (DIW Berlin)

  • Fiedler, Susann

    (WU Wien)

  • Kasy, Maximilian
  • Schupp, Jürgen

    (DIW Berlin)

  • Schwerter, Frederik

    (Frankfurt School of Finance and Management)

Abstract

How does basic income (a regular, unconditional, guaranteed cash transfer) impact labor supply? We show that in search models of the labor market with income effects, this impact is theoretically ambiguous: Employment and job durations might increase or decrease, match surplus might be shifted to workers or employers, and worker surplus might be reallocated between wages and job amenities. We thus turn to empirical evidence to study this impact. We conducted a pre-registered RCT in Germany, starting 2021, where recipients received 1200 Euro/month for three years. We draw on both administrative and survey data, and find no extensive margin (employment) response, and no impact on on job transitions from either non-employment or employment. We do find a small statistically insignificant intensive margin shift to parttime employment, which implies an excess burden (reduction of government revenues) of ca 7.5% of the transfer. We furthermore observe a small increase of enrolment in training or education.

Suggested Citation

  • Bernhard, Sarah & Bohmann, Sandra & Fiedler, Susann & Kasy, Maximilian & Schupp, Jürgen & Schwerter, Frederik, 2026. "Basic Income and Labor Supply: Evidence from an RCT in Germany," INET Oxford Working Papers 2026-08, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    • Handle: RePEc:amz:wpaper:2026-08
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    Cited by:

    1. is not listed on IDEAS
    2. Sandra Bohmann & Susann Fiedler & Maximilian Kasy & Jürgen Schupp & Frederik Schwerter, 2025. "Cash Transfers, Mental Health and Agency: Evidence from an RCT in Germany," Discussion Papers of DIW Berlin 2129, DIW Berlin, German Institute for Economic Research.
    3. Sandra Bohmann & Susann Fiedler & Maximilian Kasy & Jürgen Schupp & Frederik Schwerter, 2025. "Cash Transfers, Mental Health and Agency: Evidence from an RCT in Germany," Discussion Papers of DIW Berlin 2129, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

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    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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