Questions related to how individuals treat different types of incomes, i.e. earned and unearned have a long history in economics and policy making. This study used a field experiment in Malawi to examine the differential short-term effect of earned and unearned income on the allocation of expenditure and labor supply, holding all other factors constant. All participants receive an equal size cash payment and make the same time investment; half are required to work, and half are not. The main finding is that the work requirement results in a reallocation of labor supply away from household work in the very short term. Conversely, there is no evidence that the allocation of expenditures across categories is affected.
https://doi.org/10.1016/j.jebo.2021.03.039
Authors: Kate Ambler, and Susan Godlonton
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