Basic Income, Wages, and Productivity: A Laboratory Experiment

Jokipalo Veera Amanda ()
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Jokipalo Veera Amanda: Faculty of Social Sciences, Tampere University, Kalevantie 5, Tampere, Finland

Basic Income Studies, 2019, vol. 14, issue 2, 13

Abstract: This paper reports the results of an economic lab experiment designed to test the impact of Basic Income (BI) on wages and productivity. The experimental design is based on the classic gift exchange game. Participants assigned the role of employer were tasked with making wage offers, and those assigned as employees chose how hard they would work in return. In addition to a control without any social security net, BI was compared to unemployment benefits, and both types of cash transfers were tested at two levels. The results are that wage offers were increased in both the BI and unemployment benefit treatments compared to the control. The higher-level BI treatment also significantly increased effort. Further experimentation could shed more light on how the potential extra value created in the labor market through increased productivity would be divided between employers and employees.

Keywords: Basic Income; laboratory experiments; gift exchange; labor market equilibrium; productivity (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/bis-2019-0016

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