Unconditional cash transfers and labour supply effects: Evidence from the Alaska Permanent Fund Dividend

What are the effects of an universal and permanent cash transfer on recipients' labor supply? Since 1982, virtually every Alaska citizen receives an equal annual share from the Alaska Permanent Fund, a long-lived publicly-held investment fund which capitalizes on oil extraction from state grounds. Using data from the United States Current Population Survey, propensity score weighting and a Difference-in-Difference approach, this research finds that the Alaska Permanent Fund Dividend has a marginal yet positive effect on employment (+1.05%) and increases part-time work by 23.55% (0.0445 percentage points), and particularly so for women. Results pointing towards an increase in part-time rate are also visible at the ten-year and twenty-five-year mark from inception. Although theory and literature suggest that the individual cash transfers should decrease household supply, the evidence on the opposite sense reported in this analysis could be due to general equilibrium effects. Overall, this research finds no evidence that the Dividend, as an unconditional cash transfer, reduces labor supply.