To fill gaps in the safety net, municipalities have experimented with giving low-income residents a guaranteed income: regular cash transfers that can be spent without restriction. Combining survey evidence from a randomized experiment (n = 1,074) with longitudinal in-depth qualitative interviews (n = 56), we evaluate a two-year guaranteed income program in Compton, California. Recipients indicated that smaller, steadier transfers helped them keep up with bills, while less frequent, larger transfers enabled financial planning. Most households took actions requiring restraint, such as catching up on bills or paying off debt, but rewarded these efforts with spending to meet family wants and create exceptions in routines to spend time on memorable activities. Impacts of the transfers depend on residents’ household situations. For single-parent households (mostly single mothers), receiving unconditional money led to more work and higher earnings but also higher debt. In contrast, dual-parent households earned less, constrained their spending, and reduced their debt.
Constantino et al. (Fri,) studied this question.