Universal Basic Income: Short-Term Results From a Long-Term Experiment in Kenya

What would be the consequences of a long-term commitment to provide everyone enough money to meet their basic needs? The study examines this hotly debated issue in the context of a unique field experiment in rural Kenya. Communities receiving universal basic income (UBI) experienced substantial economic expansion—more enterprises, higher revenues, costs, and net revenues—and structural shifts, with the expansion concentrated in the non-agricultural sector. Labor supply did not change overall, but shifted out of wage employment and towards self-employment.

The research also compares the effects to those of shorter-term transfers delivered either as a stream of small payments or a large lump sum. The lump sums had similar, if not larger, economic impacts, while the short-term transfers had noticeably smaller effects, despite having delivered the same amount of capital to date. These results are consistent with a simple model of forward-looking lumpy investment, and more generally with a role for savings constraints, credit constraints, and some degree of (locally) increasing returns, among other factors.

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By Abhijit Banerjee, Michael Faye, Alan Krueger, Paul Niehaus & Tavneet Suri