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Income Transfers from the Alaska Permanent Fund Dividend

Introduction

The Alaska Permanent Fund Dividend provides cash transfers to individuals from Alaska. Jones and Marinescu (2018) study the impact of this policy on labor supply. Using data from 1982-2014, they find that the transfers do not have significant impacts on whether people choose to work, and they find some evidence of a shift from full- to part-time employment. Hendren and Sprung-Keyser (2020) use these estimates to translate them into the implied MVPF of the cash transfers from the program.

MVPF = 0.9

Net Cost

The cost of the transfers depends also on the impacts on taxable behavior. Jones and Marinescu (2018) document an increase in labor force participation of 0.1pp (95% CI of [-0.031, 0.032]), or a 0.06pp increase per $1,000 of spending. Hendren and Sprung Keyser translate this into a fiscal externality estimate of $90.53 per $1,000 of spending, or $145 per $1,602. This implies a total cost of $1,747.

$1.7K Net Cost

Willingness to Pay

The average size of the annual credit was $1,602 in 2014 USD. Because the credit is provided regardless of labor earnings, the willingness to pay is given by $1,602.

$1.6K WTP

MVPF Summary

Combining, the MVPF is $1,602 / $1,747 = 0.92 with a 95% CI of [0.89,0.95].

The estimates used to calculate this MVPF may have been updated in a more recent working or published version of the paper.

0.9 MVPF

1.0 0.9

References

Jones, Damon and Ioana Marinescu (2018). The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund. Working Paper 24312, National Bureau of Economic Research. DOI: https://doi.org/10.3386/w24312

Hendren, Nathaniel and Ben Sprung-Keyser (2020). “A Unified Welfare Analysis of Government Policies.” The Quarterly Journal of Economics, 135(3): 1209–1318. DOI: https://doi.org/10.1093/qje/qjaa006

Policy Features

Category: Taxes
Sub-Category: Cash Transfers
Beneficiary Type(s): Adults
Average Age: 33
Average Income: 35440
Country of Implementation: United States
Year of Implementation: 1998
Empirical Method: Difference in Differences
Research Type: Secondary
Peer Reviewed: Yes
MVPF Publication Link: academic.oup.com/qje/article/135/3/1209/5781614