Low Income Families With Kids Use Free Money To Care For Their Kids

How would something like a universal basic income affect low income families in a moderate income developed country like Spain?

While unconditional cash transfers have been studied extensively in developing countries, little is known about their effects in a wealthier context. Through a randomized controlled trial, we study the employment effects of a generous and unconditional transfer targeting low-income families in Spain. Two years into the program, subjects assigned to treatment are 20 percent less likely to work than subjects assigned to a control group. Assignment to an activation plan does not attenuate adverse effects; a more lenient transfer withdrawal rate does. It appears that effects are driven by subjects with children, suggesting substitution of labour for care tasks.

Timo Verlaat, Federico Todeschini, and Xavier Ramos, "The Employment Effects of Generous and Unconditional Cash Support" SSRN (2023).