Basic Income, Wages, and Productivity: A Laboratory Experiment
Abstract
This paper reports the results of an economic lab experiment designed to test the impact of Basic Income (BI) on wages and productivity. The experimental design is based on the classic gift exchange game. Participants assigned the role of employer were tasked with making wage offers, and those assigned as employees chose how hard they would work in return. In addition to a control without any social security net, BI was compared to unemployment benefits, and both types of cash transfers were tested at two levels. The results are that wage offers were increased in both the BI and unemployment benefit treatments compared to the control. The higher-level BI treatment also significantly increased effort. Further experimentation could shed more light on how the potential extra value created in the labor market through increased productivity would be divided between employers and employees.
Funding statement: This work was supported by the National Plan for R + I (Government of Spain), (Grant Number: CSO2015-64740-R (“Behavioural Public Policies”). Finnish Cultural Foundation, Central Finland regional Fund, (Grant Number: Personal working grant).
Appendix
A INSTRUCTIONS (FOR EMPLOYERS, CONTROL SESSION)
Welcome to the study!
Please, put your phone on silent, and do not communicate with anyone in the room.
If you need help, raise your hand, and we will assist you.
Your role in the study.
You have been randomly assigned the role of employee.
Another participant has been randomly assigned as your employer.
In the study, employers can make wage offers, and employees can work by solving tasks.
Your earnings in the study depend on your decisions and your employer’s decisions.
Your employer remains the same for the duration of the study, but their identity will not be revealed to you at any point.
Procedure.
The study consists of several rounds.
Each round consists of three phases.
In the 1st phase, you can make a wage offer to your employee. (The wage offer must be a whole number between 0 and 120)
In the 2nd phase, your employee can accept or reject the offer.
In the 3rd phase, If the employee accepts the offer and can works by solving a task.
The third phase lasts four minutes. During this phase,
Employees can
work by solving an encryption task 1–10 times,
do whatever else they wish, like browsing the internet or checking their phone (without communicating with anyone in the room or making noise), or
alternate between working and not working.
Employers can
use the four minutes as they wish (without communicating with anyone in the room or making noise).
You can press the Windows-button to access the desktop at any time. Please, return to the study when the third stage ends. The monitors will notify you of the time.
Accumulating points.
Your earnings are represented by points.
Points depend on the wage offer and number of tasks solved.
The employer receives 12 points for each task the employee completes correctly, if the employee solves at least one task the offered wage to the employee.
The employee receives the wage. The cost of working is 20 points for the employee. An attempt to solve a task, successful or failed, costs one additional point (the first attempt is free of cost).
If the employer makes no wage offer, the employee rejects the offer, or does not solve any tasks correctly, both gain zero points for the round.
| Cost | Benefit | ||
|---|---|---|---|
| Employer | Wage | 12 x solved tasks | |
| Employee | −20 | – (attempts to solve a task −1) | Wage |
For convenience, you are provided with a calculator in stages where you make decisions so that it may help you take decisions.
Points and earnings.
At the end of the game, your total points are converted to euros and you are paid in cash.
The conversion rate is 25/1, meaning that 25 points are worth one euro.
Earnings are rounded to the nearest ten cents.
Both you and your employee start with 125 points.
If you ever go below 0 points, you are bankrupt and you and your employee will be excluded from the rest of the study. You will need to remain seated until the session is over. Your employee will be paid according to their total points so far.
At the end of the session, a 12 € participation fee will be added to your earnings.
Example 1. If you have 475 points at the end of the game, you will receive 375/25 = 15 euros, plus the 12 € participation fee, totaling 28 euros.
Example 2. If you have 50 points at the end of the game, you will receive 50/25 = 2 euros, plus the 12 € participation fee, totaling 14 euros.
Example 3. If you have less than 0 points at any point in the game, you will receive only the 12 € participation fee.
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© 2019 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Research Articles
- Basic Income, Wages, and Productivity: A Laboratory Experiment
- How Much Does Basic Income Cost? Modelling Basic Income as Universal Life Annuity
- Exploring the Health Case for Universal Basic Income: Evidence from GPs Working with Precarious Groups
- BIS Essay Prize Winner for 2017
- Just End Poverty Now: The Case for a Global Minimum Income
- Book Reviews
- Peter Barnes: With Liberty and Dividends for All. How to Save Our Middle Class When Jobs Don’t Pay Enough
- Review of Basic Income: And How We Can Make It Happen, Guy Standing (Pelican, London 2017)
- Evelyn Forget: Basic Income for Canadians: The key to a healthier, happier, more secure life for all
Artikel in diesem Heft
- Research Articles
- Basic Income, Wages, and Productivity: A Laboratory Experiment
- How Much Does Basic Income Cost? Modelling Basic Income as Universal Life Annuity
- Exploring the Health Case for Universal Basic Income: Evidence from GPs Working with Precarious Groups
- BIS Essay Prize Winner for 2017
- Just End Poverty Now: The Case for a Global Minimum Income
- Book Reviews
- Peter Barnes: With Liberty and Dividends for All. How to Save Our Middle Class When Jobs Don’t Pay Enough
- Review of Basic Income: And How We Can Make It Happen, Guy Standing (Pelican, London 2017)
- Evelyn Forget: Basic Income for Canadians: The key to a healthier, happier, more secure life for all
