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

Abstract

Abstract Although not designed as a social program to redistribute income, the Alaska Permanent Fund Dividend (PFD) program has been reducing relative income inequality for the past 40 years by providing equal annual payments to nearly all state residents. We examine specifically the direct effects of the PFD on Alaska poverty rates over the past several decades, with a particular focus on vulnerable populations: children, elders, and Indigenous peoples. Since children of all ages may receive a PFD, accurate measurement of the effect of the PFD requires adjusting for the under-reporting of income of children in government surveys generating official poverty statistics. After adjusting individual incomes of US Census and American Community Survey Public Use Microdata Sample (PUMS) households, we find that the PFD reduced Alaska poverty rates from 2.1 to 4.2 percentage points from 1990 through 2019. The effect of the PFD on ameliorating poverty has been even larger for vulnerable Alaska populations. The PFD has reduced poverty rates of rural Indigenous Alaskans from 28 percent to less than 22 percent. The PFD has also played an important role in alleviating of poverty among seniors and children. Aside from the special case of 2020, as much as 50 percent more Alaska children – 15 percent instead of 10 percent – would be living in poor families without PFD income. The poverty-ameliorating effects of the PFD have lessened somewhat since 2000, as the dividend amount adjusted for inflation has been falling.