"Giving 1.4 Million KRW Monthly to Low-Income Households for Three Years: Surprising Results"

"Basic income reduces work motivation," studies show
Little impact on job quality, quality of life, or labor income

A study has found that providing basic income to low-income individuals leads to a slight decrease in labor market participation but a significant increase in leisure time. Although it was expected that people with more free time would search for better jobs, motivation to work actually decreased and the quality of employment remained unchanged. While the policy helped stabilize daily life in the short term, it did not lead to improvements in employment quality or long-term productivity, highlighting the limitations of cash-based welfare.

"Basic income reduces work and increases leisure"

Photo to aid understanding of the article. Pexels

On August 20 at COEX in Samseong-dong, Seoul, the results of a basic income experiment proposed by OpenAI CEO Sam Altman were presented at the World Congress of Economists (ESWC). The OpenResearch team provided 1,000 low-income individuals in Illinois and Texas with $1,000 (about 1.4 million KRW) per month unconditionally for three years starting in October 2020, while a comparison group of 2,000 people received only $50 per month.

As a result, the experimental group saw their total annual income decrease by about $2,000 compared to the control group, and their labor market participation rate dropped by 3.9 percentage points. Weekly working hours decreased by one to two hours, and spouses showed similar patterns. Instead, there was a marked increase in leisure time. There was no significant impact on employment quality, nor were there clear effects on educational investment or quality of life improvement.

The researchers stated, "While the reduction in labor supply was clear, we did not observe people using that time for productive activities such as education or reemployment," adding, "This experiment demonstrates both the impact and limitations of basic income on labor supply."

Seoul's 'Didimdol Income': Increased Consumption and Improved Mental Health, but Limited Employment Effects

Seoul Mayor Oh Sehoon is holding a meeting with citizens eligible for the Didimdol Income program at the Mapo-gu Welfare Center in Seoul.

In the same session, Professor Lee Jungmin's research team from Seoul National University revealed the short-term effects of Seoul's 'Didimdol Income' pilot project. This program supplemented the income of households with less than 85% of the median income (assets under 326 million KRW), and showed positive effects by increasing total household income and consumption expenditure.

However, the growth rates of employment and labor income actually declined. While the program helped stabilize households in the short term, its effect on labor market connection was limited. On the other hand, income support led to improvements in mental health indicators, confirming its function as a social safety net.

Pakistan Experiment: "Recipients Do Not Perceive the Benefit"

Another study found that while cash support alleviated economic hardship and inequality, recipients did not perceive these benefits. Professor Imran Rasul of University College London (UCL) and his team introduced a cash support experiment conducted in the Punjab region of Pakistan. The researchers provided 15,000 rural households with a one-time asset worth $620 (about 860,000 KRW) or an equivalent amount of unconditional cash, then observed changes among residents.

As a result, beneficiary households gained economic benefits and inequality within villages decreased, but there was little change in residents' perceptions, and attitudes toward redistribution or political tendencies did not shift significantly. The researchers analyzed, "Poverty alleviation policies can change economic realities, but social perception shifts may be much slower."

These series of experiments suggest that while cash support provides immediate income stabilization and stimulates consumption, it also reveals side effects such as decreased motivation to work and limitations in improving employment structures. Experts say, "A tailored design that considers fiscal conditions and social consensus is necessary," and, "Sustainability increases when cash transfers are combined with multi-layered safety nets such as education and reemployment programs, childcare, and medical support, rather than relying solely on simple cash transfers."