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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 ()
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Chris Riddell: University of Waterloo

No 14585, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The Income Maintenance Experiments have received renewed attention due to growing international interest in a Basic Income. Proponents viewed a Negative Income Tax as a replacement for traditional welfare with stronger work incentives and reduced poverty. However, existing labor supply estimates for single parents are uniformly negative. We re-assess the experimental evidence and find randomization failure in two NITs (Gary and Seattle). In Denver and Manitoba, we find a positive labor supply response for those on welfare prior to random assignment. Our results provide strong evidence that a NIT can increase work activity among single parents on welfare.

Keywords: negative income tax; welfare; income maintenance experiments; labour supply (search for similar items in EconPapers)
JEL-codes: C9 I38 J2 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2021-07
New Economics Papers: this item is included in nep-exp, nep-isf and nep-lma
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