New report from ISER analyzes how PFDs reduce poverty in Alaska

by Michelle Saport  |   

Permanent Fund dividends-payments the state makes to virtually all residents annually-lifted about 25,000 Alaskans out of poverty in 2015, reducing poverty in Alaska by about a third. Since 1990, PFDs have reduced poverty rates in Alaska by an estimated 2.5 to 4 percentage points annually. They have been particularly important for children, Alaska Natives, and rural residents, who are much more likely to be poor than Alaskans on average.

Those are estimates that Matthew Berman, a professor of economics at ISER, and Random Reamey, an ISER research professional, developed for their analysis of how PFDs have reduced poverty in Alaska over the past 25 years. They made their own estimates, because they discovered that the U.S. census data federal agencies use to calculate poverty rates for Alaska don't include all PFD income. So they adjusted census data to include all PFD income, and then estimated poverty rates with and without PFDs.

PFDs are paid with part of the earnings of the Permanent Fund, and how much they reduce poverty in Alaska is a relevant question today, because the state government is facing a huge budget shortfall. State leaders will have to consider using Permanent Fund earnings to help pay for public services. That was the original intent behind the Permanent Fund: that as oil revenues declined, the Permanent Fund could generate enough earnings to help pay for public services.

But using Permanent Fund earnings for public services would require reducing or eliminating PFDs-and the analysis by Matthew Berman and Random Reamey makes realistic estimates of how much eliminating PFDs would affect poor Alaskans.

Visit the ISER website to download a summary or the full analysis. If you have questions, call Matthew Berman at (907) 786-5426.

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