The debate surrounding welfare benefits often centers on their budgetary cost and the labor market participation of recipients. However, Professor Maximilian Kasy from the Department of Economics argues that this discussion lacks clear principles and empirical evidence regarding alternative policies.
Kasy outlines three principles widely accepted among economists. First, coercion, surveillance, or conditionality do not enhance the wellbeing of benefit recipients. Instead, increasing available options improves their situation. Second, tax and transfer policy involves normative choices about how much society values different individuals' wellbeing. Third, assessing transfer policies' impact requires empirical research.
Kasy has participated in two randomized policy experiments to evaluate such impacts. The first was a guaranteed job program for long-term unemployed workers in Austria from 2020 to 2024. Participants were offered employment in social enterprises or subsidized private jobs at market wages. The second experiment was a basic income trial in Germany by NGO Mein Grundeinkommen from 2021 to 2024, providing participants aged 20-40 with €1200 monthly without conditions.
Both experiments were conducted as randomized controlled trials with pre-registered analysis and independent research teams who did not receive payment for their work.
Findings revealed that "everyone wants to work," as all job offers were accepted in the job guarantee program, and no employment decline occurred among basic income recipients compared to control groups. This suggests that unemployment stems from opportunity availability rather than lack of desire for meaningful work.
Moreover, both programs improved recipients' wellbeing and mental health. Basic income enhanced autonomy by providing agency over personal decisions without surveillance pressures. The job guarantee fostered purpose, meaning, and social belonging beyond financial compensation.
Professor Kasy proposes reconsidering austerity measures within the British welfare system to ensure safety and opportunities for all citizens moving into the 21st century's welfare state framework based on liberty, equality, and solidarity principles.
Liberty advocates improving choices for disadvantaged individuals instead of imposing control mechanisms; equality emphasizes creating an inclusive safety net; solidarity calls for societal willingness to support social participation costs in wealthy nations like the UK.
While no single policy can address every issue entirely—basic income for all combined with guaranteed jobs may guide toward an opportunity-rich society—these initiatives could be significant steps forward according to Kasy's perspective.