Overview of the Final Report of the Seattle-Denver Income Maintenance Experiment. Labor Supply


The work responses to be expected from transfer programs of varying generosity are much more precisely know as a result of SIME/DIME than they were before.  It is now possible, as a consequence of the SIME/DIME labor supply analysis, to predict with some confidence how much more or less people will work as a result of new policy initiatives and what the cost implications of new programs will be.  The response to tax rate variations turn out to be smaller than was formerly thought, permitting the imposition of higher — and more cost saving — marginal tax rates.  The responses to guarantee variations turn out to be systematic and predictable.  The responses to breakeven variations turn out to be very important because (a) the income level at which benefits cease is the critical determinant of the size of the beneficiary population, and (b) the size of the beneficiary population is the most important determinant of program costs and aggregate work reductions.