Means-Tested Transfers and Prospects for a Universal Basic Income Program in the US

In a new Economic Commentary, Cleveland Fed researchers consider recent research suggesting that the elimination of asset requirements, such as policies similar to a universal basic income, could make some Americans better off, though not without large fiscal and macroeconomic consequences.

Andre Victor D. Luduvice and Cornelius Johnson examine the structure of the income security system of the United States and its major programs by analyzing, along the income distribution, the net worth of means-tested transfer recipients, i.e., families and individuals who qualify to receive benefits.

The researchers use the Survey of Income and Program Participation to document a contemporary picture of the means of its recipients and find program recipients have a smaller average net worth than nonbeneficiaries.

“We find transfers are substantially more relevant at the bottom of the income distribution and resources subject to testing are unevenly distributed between recipients and nonrecipients,” say the researchers. “Participants at the very bottom of the income distribution are in asset poverty and those who receive benefits have a relatively larger share of assets in property and other noncash items when compared to nonrecipients.”

Read more: Means-Tested Transfers, Asset Limits, and Universal Basic Income

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