2023
Language:
English

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? We examine this hotly debated issue in the context of a unique field experiment in rural Kenya. Communities receiving 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. We also compare 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.