Lessons from the Income Maintenance Experiments: An Overview

The United States public welfare system has been a source of discontent for many years. The system has been characterized as one that discourages work, undermines the family, and perpetuates dependence. In the late 1960s and early 1970s, many experts believed that the negative income tax represented a simple and desirable alternative to the existing programs. The complex set of cash and in-kind benefits paid to certain categories of the poor would be replaced with a single guaranteed income payment for all poor families that would gradually diminish as earnings increased. Congress, however, was extremely reluctant to enact such a plan. One reason for the political opposition was the widespread fear that a guaranteed income would reduce the work effort of poor breadwinners and, as a result, cost taxpayers a great deal of money. In an effort to gain some knowledge about the potential impact of a guaranteed income on labor force activity, the federal government in the late 1960s and 1970s sponsored four large-scale social experiments to measure individuals’ responses to different levels of benefits and tax rates. Although the negative income tax itself has fallen from favor, the labor supply question and the other basic issues studied in these experiments are still relevant to the current social welfare debates. Architects of new programs need to know the effects of particular reforms on work effort, family stability, housing, food consumption and the well-being of dependent children. The negative income tax was tested in four separate experiments. The first experiment, in New Jersey and Pennsylvania, lasted from 1968