Universal Basic Income doesn’t make the poor lazy, Iranian experience shows
Universal and unconditional cash transfers did not necessarily lead to decline in labour supply among the poor in Iran
Two main arguments which are given against Universal Basic Income programmes are burden on exchequer and decline in labour supply as people get paid without working. The second argument might not be true, shows a study based on cash handouts in Iran. The initial handouts, which started in 2010, were to the tune of $40 per month. The paper uses household survey data to show that the poor did not necessarily reduce their labour supply when they received cash handouts. Overall labour force participation remained the same in both the years of the study, 2010 and 2011, at 88% for men and 18% for women. In fact, poorer service sector workers actually increased their hours of work, using the extra cash to expand their business. However, there was some decline in labour force participation among youth, but the authors say this could be due to increased enrolment in education.