Do Welfare Policies Matter for Labor Market Aggregates? Quantifying Safety Net Work Incentives since 2007
Inflation-adjusted spending on means-tested subsidies has increased sharply since 2007, and most of the growth was due to changes in eligibility rules, and increases in subsidies per eligible person, rather than increases in the number of people who would have been eligible under pre-recession subsidy rules. In 2007, the non-elderly parts of the safety net paid about $10,000 in benefits per person-year that non-elderly heads of household or spouses were unemployed. By the end of 2009, the annual subsidy rate per person-year unemployed was up to $16,000. As a result, the average private returns to employment are substantially less than they were in 2007. One result of the paper is a monthly time series for the overall safety net’s marginal income tax rate from the point of view of the average marginal worker.
You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.
An online appendix is available for this publication.
Document Object Identifier (DOI): 10.3386/w18088
Users who downloaded this paper also downloaded these: