The study was conducted by researchers from the University of Toronto, the University of California, Berkeley, the University of Michigan, the University of Illinois, and OpenResearch Lab. They aimed to assess whether direct cash transfers could effectively alleviate poverty and provide beneficiaries with greater flexibility in purchasing necessities. Additionally, the team sought to determine if such cash transfers would aid recipients in finding better jobs, starting new businesses, or investing in human capital. The experiment involved 1,000 low-income individuals living in rural, suburban, and urban areas across Texas and Illinois. Participants had an average household income of approximately $29,900. Those in the study received $1,000 per month for three years, resulting in a roughly 40 percent increase in their income. A control group of 2,000 participants was also established, with those individuals receiving $50 per month. Despite the additional $12,000 per year provided to UBI recipients, researchers found that they actually earned $1,500 less annually than before. Participants also remained unemployed for an additional month compared to those in the control group. Furthermore, UBI recipients worked fewer hours and did not experience significant improvements in employment quality. The study also noted an increased likelihood of recipients claiming disability to reduce their work hours. While the study observed that participants showed “more interest in entrepreneurial activities and a willingness to take risks,” it also found a decrease in hours worked for both the participants and their partners. The guaranteed income led to more time spent on leisure activities, and researchers reported “no significant effects” on human capital investment. “Rather than being driven by such program features, participants in our study reduced their labor supply because they placed a high value, at the margin, on additional leisure,” the researchers stated. “While decreased labor market participation is generally characterized negatively, policymakers should take into account the fact that recipients have demonstrated — by their own choices — that time away from work is something they prize highly,” they added.A team of researchers recently completed a comprehensive study on the effects of universal basic income (UBI) on American families, concluding that guaranteed income programs may have a negative net impact.
