The Impact of Universal Basic Income Programs on Labor Force Participation Rates and Entrepreneurial Activity in Developed Economies

Abstract

Universal Basic Income (UBI) has become a well-known policy proposal in advanced economies, which resulted in considerable discussion concerning its possible impact on the labor market behavior and entrepreneurial processes. This paper investigated the effect of UBI programs and workforce participation rate as well as entrepreneurship in developed economies in a systematic literature review and meta-analytical review. In search of peer-reviewed articles, working papers, and official reports published in 2015-2024, the researcher performed an extensive search of the academic databases of JSTOR, EconLit, Google Scholar, and Web of Science. The search strategy was based on the use of keywords like universal basic income, labor force participation, entrepreneurship, guaranteed income, and cash transfers with particular country names. The researcher used inclusion criteria that narrowed down to only the empirical study with a quantitative or mixed-method design reporting the results of labor market and entrepreneurship leading to the final sample of 45 studies. The extraction of data was based on critical variables such as sample sizes, program duration, program transfer amounts, labor participation rates, self-employment rates and new business formation statistics. Results showed that UBI initiatives did not have significant adverse effects on paid workforce participation with small positive effects on entrepreneurship especially in low-income groups and those with caregiving obligations. This study also found that UBI programs did not produce mass labor market exit or significantly increase the number of entrepreneurships in developed economies, implying some sensitive implementation implications to policymakers in both developed and developing settings.

Keywords: Universal Basic Income (UBI), policy proposal, advanced economies, impact, labor market behavior, entrepreneurial processes.