The employment effects of a means-tested guaranteed income policy

Timo Verlaat, Federico Todeschini and Xavier Ramos

Journal of Public Economics, 2025, vol. 248, issue C

Abstract: Through a randomized controlled trial, we study the labor market effects of a generous means-tested guaranteed income policy targeting low-income families in Barcelona. Two years into the program, beneficiaries are 22 % less likely to work compared to subjects assigned to a control group. A lower phase-out of transfers attenuates negative employment effects and reduces the government cost per euro of benefit by two-thirds. Participation elasticities for a family of four range from 0.39 to 0.49. Treatment effects persisted at least 6 months after the program ended. We find indications that effects are driven by subjects with care duties, suggesting substitution of labor for care tasks.

Keywords: Welfare; Cash transfer; Policy evaluation; RCT; Labor supply (search for similar items in EconPapers)
JEL-codes: C93 H53 I38 J64 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:248:y:2025:i:c:s0047272725001185

DOI: 10.1016/j.jpubeco.2025.105420

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