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

Sarah Bernhard, Sandra Bohmann, Susann Fiedler, Maximilian Kasy, Jürgen Schupp and Frederik Schwerter

No xe8zh_v1, SocArXiv from Center for Open Science

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 job transitions from either non-employment or employment. We do find a small statistically insignificant intensive margin shift to part-time employment, which implies an excess burden (reduction of government revenues) of ca 7.5% of the transfer. We furthermore observe a small increase of enrollment in training or education. (Stone Center on Socio-Economic Inequality Working Paper)

Date: 2025-06-21
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Working Paper: Basic Income and Labor Supply: Evidence from an RCT in Germany (2025)
Working Paper: Basic Income and Labor Supply: Evidence from an RCT in Germany (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:xe8zh_v1

DOI: 10.31219/osf.io/xe8zh_v1

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