A rising tide that lifts all boats: Long-term effects of the Alaska Permanent Fund Dividend on poverty

Abstract

Although not designed as a social program to redistribute income, the Alaska Permanent Fund Dividend (PFD) has been reducing poverty by providing equal annual payments to nearly all state residents for over 40 years. We examine direct effects of the PFD on Alaska poverty rates since 1990, using US Census and American Community Survey Public Use Microdata Sample records to adjust for under-reporting of children's PFD income in official statistics. We estimate that the PFD reduced the number of Alaskans with incomes below the US poverty threshold by 20%–40%. We measure only a small effect on income distribution: a 0.02 reduction in the Gini coefficient. The effect of the PFD has been even larger for vulnerable populations. The PFD has reduced poverty rates of rural Indigenous Alaskans from 28% to less than 22%, and has played an important role in alleviating poverty among seniors and children. Aside from the special case of 2020, up to 50% more Alaska children—15% instead of 10%—would be living in poor families without PFD income. The poverty-ameliorating effects of the PFD have lessened somewhat since 2000, as dividend amounts adjusted for inflation have been declining.