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Alaska’s Permanent Fund Dividend has no overall effect on employment

Alaska’s provision of regular, unconditional income to its inhabitants has had no overall effect on employment, a recent study has found.

The Permanent Fund Dividend (PFD), provided by the Alaskan government to all citizens who apply for it, currently stands at approximately $2000 per person per year. The authors of the study have indicated that, although this seems a small amount, the fact that it is applied regardless of age means that a two-parent family with two children could claim $8000 per year, which is considerably more substantial.

The study was carried out by Associate Professor Damon Jones of the University of Chicago’s Harris School of Public Policy, and Assistant Professor Ioana Marinescu of the University of Pennsylvania School of Social Policy and Practice. Jones is a Faculty Research Fellow at the National Bureau of Economic Research, while Marinescu has had her research published in a number of peer-reviewed journals.

Claims have previously been made that the provision of a universal basic income such as the PFD would tend to discourage participation in the workforce. However, the studies which seemed to support this have been based on situations where the money provided was given only to a small group of people. Jones and Marinescu posited that, in a situation where unconditional funds are provided to a large population, effects on employment could differ.

The study did in fact find that there was no overall decrease either in employment or in overall hours worked. The authors suggest that one reason for this could be that the PFD recipients, in spending their additional funds, are indirectly increasing the need for extra employees to provide goods and services to them.

The only significant change found by the study was a 17% increase in part-time work. Given that a greater percentage of women than men appeared to be taking up part-time work, it is possible that this change may have been, at least in part, the result of women using the extra funds to provide childcare, without which they would have been unable to remain part of the workforce.

The study was reported in a number of news outlets, including the New Yorker.

Alaska’s Permanent Fund originated in the 1970s, with a sudden influx of money due to revenue from newly exploited Alaskan oil reserves. Following concerns that a corresponding increase in government spending could be unsustainable should the amount of oil revenue decrease, the Permanent Fund was established, receiving 25% of “all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State”, according to the wording of the relevant amendment to the Alaskan constitution.

The Permanent Fund Dividend was first provided in 1982, when it was only a few hundred dollars per person. It has since increased at an approximate rate of $500 per decade.

 

Edited by: Dawn Howard

About Claire Bott

Claire Bott has written 23 articles.

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The views expressed in this Op-Ed piece are solely those of the author and do not necessarily represent the view of Basic Income News or BIEN. BIEN and Basic Income News do not endorse any particular policy, but Basic Income News welcomes discussion from all points of view in its Op-Ed section.

2 comments

  • Jenny Bell-Jones

    As an Alaskan resident I was interested to read this and want to point out a few things to put the PFD in context. The amount changes from year to year and now, as a result of budget problems due to low oil prices it will likely be a lot lower than $2000 for the foreseeable future.
    I have not read this study yet but readers should understand that many PFD recipients live in communities where there is almost no employment other than subsistence hunting and fishing. Because subsistence activities, which can be extensive, are not paid, they do not show up as “employment” or “unemployment” however in many cases PFD payments are keeping village residents employed by helping them to pay the costs of subsistence activities.
    In other words, while those of us who have employment generally do not stop working because we get the PFD, a significant number of those who are not working are in that situation because there is no paid employment … not because they get the PFD.

  • June Ryan

    Every citizen to receive $200 per week direct to a Bank Card
    Allowance must be spent within a certain period (3 months?) or will be cancelled.
    Allowance cannot be banked therefore no threat of inflation
    Purpose of Allowance is to ensure everyone the right to live a decent life without the need for charity or condescension.
    Meeting basic needs with respect for ALL
    Essential goods and services achieved without debt or taxes.

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