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

Chris Riddell and W. Craig Riddell

Journal of Labor Economics, 2024, vol. 42, issue 2, 427 - 467

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.

Date: 2024
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Working Paper: Welfare versus Work under a Negative Income Tax: Evidence from the Gary, Seattle, Denver and Manitoba Income Maintenance Experiments (2021)
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