New Horizons for Human Solace: Universal Basic Income Making a Difference in People’s Well-Being

Abstract

The United States' two chief disability programs, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), have been subject to two widespread sets of policy concerns: the potential effect of these programs in suppressing recipients' labor supply and the insufficiency of these programs in providing economic stability and dignity. The Alaska Permanent Fund Dividend (PFD) -an unconditional cash transfer program paid to all Alaska residents -may provide a model for increasing economic security for working aged (18 to 62 year old) SSI and SSDI recipients without imposing distortionary labor supply effects. By leveraging the stochastic fluctuations in the size of the PFD, this paper utilizes a plausible source of exogenous variation in the PFD transfer income to estimate the effect of this unconditional cash transfer on employment among adult SSI and SSDI recipients. This paper estimates the effect of this program through the construction of a synthetic control variable and the application of a difference-in-difference estimator to the American Community Survey (ACS). After establishing that the Alaska PFD has a small and statistically insignificant effect on employment, this paper asks what effect this program may have on poverty if it were implemented nationwide. Via a microsimulation approach, this paper estimates that if a transfer comparable to the Alaska PFD had been scaled nationally for adult SSI and SSDI recipients poverty rates would have been reduced by as much as 10 percentage points and would have offset the entirety of the rise in poverty among adult SSI and SSDI recipients since 2000.